The Euro is has now failed to find direction for a 3rd straight day against the greenback but on the upside has curtailed its losses against the worlds most popular currency as the market temporarily sets aside concerns regarding the collapse of Evergrande, one of China’s biggest companies.
The reason for this is most eyes are currently on the US Federal Reserve which began its two-day policy meeting yesterday which will conclude today. With an interest rate decision followed by a monetary statement.
Interest rates are widely anticipated to remain unchanged, and the focus will be on the following monetary statement from Fed president Jerome Powell for hints about when and how the central bank will begin to cut back on their stimulus programs that were introduced to counter the effects of the Covid 19 pandemic which has decimated the American and in fact world economy.
Analysts are currently evenly divided on whether the Fed will begin tapering before year-end so the news may come with a few surprises, so traders are bracing themselves for some major moves in the currency markets.
From the Eurozone today, it’s another relatively quiet day ahead on the economic calendar and the lack of news will leave the EUR in the hands of market risk appetite and sentiment towards FED monetary policy and projections due late in the day.
The failure of the Euro to find direction as we enter today’s trading session show’s that traders are weary of placing bets before the Fed monetary statement due for release later today but that may change as we enter the American session and get closer to the news release.
Some interesting news is coming from the options market which is at its most bullish in over three weeks regarding the growth of the EUR/USD currency pair which shows some in the market expect the Fed to hold off from tapering for now and that would cause a huge upward spike for the Euro.