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Aug 07 - 11:55 AM

EUR/USD - COMMENT-Dueling Fed Rhetoric Gives EUR/USD Longs Some Hope

By Christopher Romano  —  Aug 07 - 09:50 AM

EUR/USD remains in a short-term down trend, but it regained much of its earlier losses and is now near flat as the latest Fed rhetoric calls into question the prospects for additional rate hikes.

Fed Governor Michelle Bowman said Monday additional rate increases will likely be needed to bring inflation to the Fed's goal.
Bowman's comments mostly reiterated what she said to a banking group on Saturday.

However, in a New York Times report, New York Fed President John C.
Williams said that depending on economic data he expects interest rates could begin to come down in early 2024.

Williams said inflation data has been coming in as he expected and hoped, and his rhetoric on rate cuts appears to be reflected in SOFR futures.
SOFR futures investors have priced in a rate cut for Q1 2024 SRAH24 and have priced in aggressive Fed rate cuts thereafter.

The comments will have investors closely scrutinizing upcoming U.S. pricing data.
July CPI is due August 10 and PPI is due August 11.

Should the data show disinflation persisting the probability for Fed cuts may increase which should weigh on the dollar and rally EUR/USD.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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