EURUSD rose pretty much; investors aren’t interested in the “greenback”.
The major currency pair remains in a good mood on Wednesday. The current quote for the instrument is 1.1364.
The US Fed Chairman Jerome Powell, who spoke yesterday, provided market players with enough catalysts for further movements. First of all, Powell found a perfect timing to stop calling inflation boost a temporary phenomenon – now it’s quite clear that it won’t go away so easily. Secondly, there were signals that the American regulator would do its utmost to raise the rate and decrease its own balance to prevent inflation boost reach stability.
Powell said that the Fed would use its tools to reduce inflation but if the CPI continued rising, the regulator would have to raise the rate much higher. The American economy no longer requires the accommodation policy, its labour market is recovering extremely fast – the unemployment rate is low and may continue decreasing. This year, the monetary policy will get closer to its pre-pandemic levels, which means that the time has come to give up on stimulus programmes and let the economy move by itself.
Overall, Powell sounded quite “hawkish” and it’s interesting whether this tone continues. However, investors seem to like it and their risk attitude improved.
Later today, their attention will be focused on the December CPI reading from the US, which is expected to show 7.1-7.2% y/y. If so, it may force additional fluctuations in EURUSD.