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Nov 03 - 12:55 PM

EUR/USD: Vulnerable To Dive Towards 1.15 N-Term - TD

By eFXdata  —  Nov 03 - 10:45 AM
TD Research discusses the USD outlook around today's FOMC policy meting. 
"Today's Fed meeting would be the icing on the cake, insofar as the meeting could reinforce some of the recent market trends. We don't expect an overly hawkish Fed, anticipating Powell will stick to the recent script on the sequence of tapering and rate hikes. Market expectations align for a $15bn/month taper pace and we look for the first rate hike in 2023," TD notes. 
"Even so, the markets will likely overreact to any shift in the Fed's inflation position. If Powell tries to project "flexibility" in their thinking around the inflation risks, markets will pounce. Now the Fed doesn't have to deliver a hike next year; market pricing needs to recalibrate that they will in the short run. The latter would drive the USD higher, supporting a broad near-term bounce, leaving EURUSD at risk of a dive towards 1.15," TD adds. 
TD Bank Research/Market Commentary


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