The EUR/USD currency pair initially stands at 1.1125 dollars before the eagerly awaited Fed interest rate meeting. Although the market expects a pause in interest rates, the rhetoric from Fed Chairman Kevin Warsh at the subsequent FOMC press conference is likely to be put to the test.
The ECB meeting on Thursday is likely to cast its first shadows soon as well.
EUR/USD chart on a monthly basis
Interest rate pause possible – Kevin Warsh is likely to send out monetary policy signals
Tonight at 19:00, the US Federal Reserve (Fed) will decide on the future level of the key interest rate. However, economists expect the US central bank to remain silent on interest rates.
According to the „Fed-Watch Tool“ of the CME Group, a few hours before the monetary policy event, 90.6 percent of market participants expect a pause in interest rates and 9.4 percent an interest rate increase, totaling a quarter of a percentage point.
European Central Bank in focus on Thursday – GDP and German inflation rate to be released on Friday
The ECB interest rate decision is scheduled for Thursday (14:15). In this case too, the so-called deposit rate is expected to remain at 2.5 percent, unchanged. The press conference with President Christine Lagarde will be the focus of attention starting at 14:45.
Friday is also likely to be a busy day on the economic calendar. The GDP growth rate will be in the spotlight as early as 10:00 a.m., while the counterpart for the Eurozone is expected to provide momentum at 11:00 a.m.
Preliminary estimates for the German inflation rate also need to be taken into account (14:00). In this context, experts expect an inflation rate of 3.0 percent compared to the same month last year, after previously 3.3 percent.
