The market might be very disappointed by the Fed again this year – Nordea
Source Fxstreet
Recent commentary by the Fed and continued strong data means we might have to wait much longer for US rates to go lower, analysts at Nordea say.
Markets are starting to realize that the upcoming rate cuts will not look like a normal cycle
The market is dialing back the pricing of rate cuts backed by continued strong data and commentary by the Fed.
For the central bank to cut in March, we would need to see low inflation prints for January and February, which does not seem unlikely, but the risk is the Fed will wait and in the meantime, inflation will start to move higher again on increases freight rates and renewed wage pressure. In the latter case, we might not see rate cuts this year at all.
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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With the ECB likely holding rates steady at 2.15% and the Fed potentially extending cuts into 2026, EUR/USD may test 1.20 if Eurozone growth proves resilient, but weaker growth and an ECB pivot could pull the pair back toward 1.13 and potentially 1.10.
