- EUR/USD bears hold the baton and set their sights on 0.9950.
- The US dollar is firmer on aggressive sentiment surrounding the Fed.
The EUR/USD has set a new low in the American mid-session, near 0.9973, and has fallen from a high of 1.0187 on the day, after the US inflation data. At the time of writing, the price is trading about 1.4% lower on the day, with an eye on 0.9950.
According to the Labor Department report, consumer prices largely exceeded expectations, and core inflation picked up amid rising rent and healthcare costs. The core index also significantly beat expectations, thanks to relentless house price inflation, with a strong increase of 0.6% MoM. Headline CPI year-over-year fell to a four-month low of 8.3%, but core index prices accelerated to a five-month high of 6.3% year-on-year,” analysts at TD Securities explained.
“In our view, the August CPI report supports a continued aggressive effort by the Fed to tighten its inflation-adjusted policy.”
We now expect the FOMC to raise the target interest rate by 75 basis points at its meeting next week, make another 75 basis point hike in November, and raise another 50 basis points in December. We also now expect a higher terminal rate range, between 4.25% and 4.50%, by the end of the year.”
However, analysts at Nomura said Tuesday that the Federal Reserve is likely to raise its short-term interest rate target by one percentage point at its policy meeting next week, due to emerging inflation risks. upward. The Federal Reserve will announce its monetary policy decision at the end of its two-day meeting next week, on September 20-21.
Nomura forecast that the US central bank would raise its federal funds rate by 50 basis points at meetings in November and December. The Fed Funds target is currently between 2.25% and 2.50%, following the Fed’s 75 basis point hike in July.
EUR/USD technical analysis
Per previous analysis, EUR/USD Price Analysis: Bears eye a run to 0.9950 after break of trendline support, stated that the weekly chart showed that the price was correcting towards the neckline of the formation. M with margin for a deeper correction towards a ratio of 61.8%:
Update:
The price has been rejected at the 61.8% ratio and is now seen moving lower towards 0.9955 according to the hourly chart:
Source: Fx Street
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