Societe Generale Research sees a scope for ER/USD and GBP/USD correction on a lack of surprises from this week's Fed and ECB policy meetings.

 

"The dollar correction has further to go, but is, perhaps, due a pause as the drivers so far (US term rates peaking, European sentiment improving, the BOJ pivot and China reopening) are priced in, to a significant degree. Where does the next piece of good news for the global economy come from. Today’s FOMC meeting is expected to deliver a 25bp hike but push-back at the forward pricing of rates later in the year. Barring a surprise, we’ll move towards services ISM data and the jobs report, knowing little more than we do now. A hawkish 50bp move by the ECB tomorrow wouldn’t surprise anyone," SocGen notes. 

 

"EUR/USD 1.06. before it’s net leg up. If that happened, the bigger loser might be GBP, which has been supported by the tailwind from the EUR/USD recovery. A GBP/USD level below 1.20 in March seems likely," SocGen adds.