The euro had a choppy day yesterday as the EURUSD pair moved down during the early half of the day on the back of some dollar strength and then moved higher during the late US session as the dollar weakened. It has been all about the dollar yesterday and we are likely to see more of that today as well as we had into the FOMC.
EURUSD Choppy Ahead of FOMC
The day yesterday was spent in anticipation of the FOMC rate announcement and statement that is scheduled to be released today. There was also talk of the details of the tax reform bill being released and we get closer to its vote in the Senate and by all the signs, it looks that it would get passed without much ado. This helped to push the dollar higher during the European session and we saw the pair drift below the 1.1750 mark and towards the 1.17 region. It looked as though a lot of pain would be inflicted on the euro.
But later during the US session, the voting for the Alabama state came in and it showed the victory to Democrats and a loss to Republicans which pushed the dollar on the backfoot as it came under pressure. This helped the euro to recover a bit and close the day above 1.1750 but not much can be read into what happened on the trading floors yesterday.
The focus is clearly on what is going to happen with the FOMC rate statement today. The market has already priced in a rate hike from the Fed today but it would also expect the Fed to be hawkish about further rate hikes in 2018. If the Fed disappoints by being neutral or dovish, then we could see the dollar slide all across the board. We also have the inflation data from the US before that and the market would be looking forward to some strong data.
This article was originally posted on FX Empire