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Feb 23 - 11:55 AM

EUR/USD - COMMENT-EUR/USD Longs In No Rush To Exit Despite Patient Fed

By Christopher Romano  —  Feb 23 - 10:05 AM

EUR/USD traded positive and above its 200-DMA on Friday as investors aren't panicking despite some bearish influences from the Fed and yield spreads.

The latest rhetoric from the Fed indicates the central bank will remain patient when it comes to cutting rates.

Fed Governor Christopher Waller said he wants to see if the recent inflation rise is just a bump in the road, and, therefore, he sees no need to rush rate cuts.

Fed Governor Lisa Cook said she would like to have greater confidence inflation is converging on 2% before beginning cuts.

Philly Fed President Patrick Harker said he's eying the start of rate cuts some time in the second half of 2024.

Meanwhile, Goldman Sachs analysts adjusted their expectations and no longer expect the Fed's first rate cut in May.

The rhetoric, and altered rate cut expectations, helped German-U.S.
2-year spreads US2DE2=RR, which EUR/USD is correlated with, to widen.

Despite those factors, EUR/USD longs are not running for the exits in a market that still remains positioned net-long the euro.
Thus, the pair's resiliency in the face of bearish influences may be considered a bullish signal.

In any event, EUR/USD longs are likely waiting for U.S. February PCE and payroll reports before they decide what their next move will be.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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