The EUR/USD currency cross is trading a little higher, remaining above the 1.1500 level. Investors are on edge awaiting key monetary policy decisions from the Federal Reserve later this afternoon. This movement reflects a larger trend in the foreign exchange market. The Euro is clinging to small gains as traders look ahead to the Fed’s announcements.
During the American session on Wednesday, EUR/USD was trading well above 1.1500 – pointing to a stronger dollar today. Market observers say that investors are hungrily looking for signs of future interest rate moves. All of these changes would be major blows to the dollar’s current dominant value.
The GBP/USD pair trades around the 1.3450 level. This is just as the new UK Consumer Price Index (CPI) data has been released. UK CPI inflation fell slightly to 3.4%, in line with market expectations, according to the report. This small reduction could inform the Bank of England’s ongoing policy direction. Market participants will be observing these changes with rapt attention.
Investor sentiment is likely to stay under pressure as geopolitical tensions continue to mount in the Middle East. Persistent uncertainties surrounding trade still weigh on this dovish outlook. Together these three factors paint a very difficult picture for central banks and one that makes dealers very cautiously optimistic in their currency directional views.
GBP/USD tumbled on Tuesday, hitting levels not seen in nearly 37 years. Nevertheless, it has turned around since then, rebounding sharply and on Wednesday’s European session carving out small recovery gains back up towards 1.3450. The volatility in these pairs illustrates how external factors can significantly influence currency trends.
As central banks begin to make way for an eventual normalization in monetary policy, market participants are understandably on high alert. The Federal Reserve, America’s most important bank, is about to make some key moves. These moves are sure to provide increased direction and set the tone for the trading week to come.
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