The euro is chewing into its post-ECB losses at an accelerating pace.
EUR/USD is up 109 pips to 1.0850 and at the highs of the day. The euro is benefiting from broad US dollar selling and position squaring in the dollar ahead of the FOMC decision at 2 pm.
The market is growing more comfortable with the idea of Fed rate cuts in September and December to kick off an easing cycle. That’s after May CPI fell to 3.3% y/y from 3.4% and core measures also sagged. It’s the kind of progress that officials want to see before lowering rates from 5.00%.
The euro is a mid-performer in the FX world, slightly ahead of the pound and trailing the Australian and New Zealand dollars. The extra strength over the pound today could reflect shorts after the ECB decision covering and re-evaluating.
This article was written by Adam Button at www.forexlive.com.
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