EUR/USD: watch risks assets on FOMC – Rabobank

By FXStreet FXStreet (Guatemala) – Analysts at Rabobank explained that over the medium-term they expect the USD to remain well supported vs. the Fed, though we remain reluctant to forecast a move below the 1.05/1.04 area in 2016.

Key Quotes:

“In the short-term, the reaction of the USD will be guided not just by the message provided by the Fed but also by what the markets are positioned to hear. The gains in EUR/USD made since the start of the month suggest there is now less scope for a ‘sell on the fact’ reaction in the USD, though if a surprisingly dovish set of forecasts from the Fed for 2016 were outlined, this would still be likely.”

“A more confident tone from the Fed on the outlook for both the US economy would likely chase EUR/USD lower particularly if Chair Yellen manages to hike US rates without sparking a sell-off in risk assets. If risk assets are spooked by the Federal Reserve tomorrow, however, downside potential for EUR/USD could prove to be limited.”
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Source:: FX Street