- The euro fails to break above 1.1000 for the second day in a row.
- The US dollar is paring daily losses as attention turns to the Fed meeting.
- EUR/USD could fall towards 1.05 in the coming months – BofA.
The euro is losing ground in the US trading session on Tuesday after failing to extend beyond the 1.1000 level for the second day in a row. EUR/USD is paring back earlier gains and is little changed on the daily chart, trading just above 1.0950.
The euro loses strength with all eyes on the Federal Reserve
The common currency is losing momentum with the dollar rallying as the market prepares for the Federal Reserve’s monetary policy decision on Wednesday. With consumer inflation at levels not seen in decades, the Fed is poised to raise rates for the first time in three years, which is providing some support to the USD.
Earlier today, the Euro has seen some positive price action, helped by the sustained reversal in oil prices and subdued optimism regarding the Russia-Ukraine peace talks. The pair, however, has been capped just above 1.1000 before returning to the mid-range of 1.0900.
EUR/USD could extend its decline towards 1.05 – BofA
Looking further ahead, Bank of America Global Research expects the euro to extend its downtrend in the coming months: “The start of Fed rate hike cycles has typically not boded well for the USD outlook, but A dovish tone from the Fed amid risks of higher inflation could end up supporting the dollar for a while longer if terminal rate expectations continue to rise against the backdrop of persistent risk aversion and related high commodity prices. with the war in Ukraine (…) We recently revised down our EUR/USD forecast to 1.05 and continue to see downside potential on a short to medium term horizon”.
Technical levels
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
