The single European currency is trading marginally above the 1,0850 level on a crucial day as the US Federal Reserve at its monthly meeting will keep key interest rates steady but is likely to significantly change bets on the future outlook.
Regarding any change today in the level of key interest rates there is no any possibility so all interest is focused on the forecasts that Fed will publish regarding the level of inflation in the next period and the projections on the height of key interest rates in 2024 and 2025.
The evening is expected to be particularly hot and any surprises are expected to strongly affect the exchange rate with the risk of breaking critical levels high.
Yesterday as expected did not provide any major surprises and despite the fact that the US currency tried to come to the fore soon balances were reached and the European currency reacted slightly as investors avoided holding large positions ahead of today’s critical day.
Apart from Fed’s meeting which definitely stands out today, we also have the speech of President Lagarde which could bring some new data to the table and temporarily affect the course of the pair before the evening.
If Fed’s President does not scare the market and does not convey worrying messages about the course of US economy and in general the projections and outlook on inflation and interest rates remain hot the possibility that 1,08 level will collapse is increased.
On the contrary, any dovish rhetoric and worrying messages about the US economy will give the European currency the opportunity to return to the fore.
In view of the crucial meeting the waiting attitude is probably a good idea.
