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On June 16, Luca Pesarini, an analyst at Ethenea, said in a report that the Federal Reserves meeting this week will not be remembered for the interest rate path, but more of a test of the central banks independence. "The real challenge is not the conflicting economic data, but the political interference in monetary policy communication," Pesarini said. Trump previously announced that he would soon appoint a successor to Federal Reserve Chairman Powell, nearly a year before Powells term expires. This puts the concept of "shadow chairman" in the spotlight. Pesarini said that if this news is announced, there is a possibility of conflicting monetary policy signals between the Fed officials and the designated successor, especially if the latter publicly pushes for rate cuts.Russian Foreign Intelligence Service: Ukraine and Europe are preparing provocative actions against Russia.June 16, UBS economists said in a report that the Bank of England is likely to keep interest rates unchanged in its interest rate decision on Thursday. Economists said that uncertainty surrounding the outlook for UK economic growth and inflation may cause the Bank of England to keep interest rates at 4.25% in June. However, the Bank of England may cut interest rates in August and November, bringing the rate down to 3.75% by the end of 2025.Artillery fire was heard over Tabriz, Iran.Brazilian economists expect the SELIC rate to be 14.75% at the end of 2025, the same as previous forecast; and expect the SELIC rate to be 12.50% at the end of 2026, the same as previous estimate.

EURUSD attracts sells below 1.0400 in anticipation of Lagarde's ECB address

Daniel Rogers

Nov 18, 2022 15:12

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The EURUSD lacks direction at 1.0365 on Friday morning after registering its first daily loss in three sessions. In a poor session preceding Christine Lagarde's speech as president of the European Central Bank, the primary currency pair reduces its weekly gains (ECB).

 

The inability of the US Dollar to justify the recovery in US Treasury yields from their six-week low has recently exerted pressure on the EURUSD bearish. The cautious optimism around US President Joe Biden's effort to relax student loan regulations and the most recent survey on the Fed's next move may also pose a danger to pair sellers.

 

The Biden administration will seek the Supreme Court to reinstate the student loan debt relief program, according to CNBC. On the other hand, the Philadelphia Fed Manufacturing Index and housing data for October may have put doubt on the Fed's recent hawkish language.

 

In addition, the most recent Reuters poll for the US Federal Reserve (Fed) indicates that the Fed will downshift in December to deliver a 50 basis point (bps) interest rate hike, but a longer period of US central bank tightening and a higher policy rate peak are the greatest risks to the current outlook.

 

Nonetheless, strong Fed language and weakening Eurozone data may be regarded as the pair's most recent difficulties. Thursday, James Bullard, president of the Federal Reserve Bank of St. Louis, remarked that the US Federal Reserve's (Fed) monetary policy is not now deemed restrictive enough to reduce inflation. In a similar vein, Neel Kashkari, president of the Minneapolis Federal Reserve Bank, stated: "With inflation remaining high and a substantial degree of monetary policy tightening already underway, it is questionable how high the US central bank will need to increase the policy rate."

 

Notably, a downward revision to Eurozone inflation data, as measured by the Harmonized Index of Consumer Prices (HICP), to 10.6% (final) in October from 9.9% (preliminary) in September also favored EURUSD bears the day before.

 

The benchmark 10-year US Treasury yields recovered from a six-week low before remaining roughly unchanged at 3.77 percent, while the S&P 500 Futures remain uncertain as of press time.

 

As the pair loses bullish momentum, a remark from ECB President Lagarde will be crucial for EURUSD price action in the immediate future. However, hawkish words from Lagarde and lower US Existing Home Sales statistics for October will keep bulls in play.

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