FX Street takes a look at the current state of the EURUSD in its Mid-Week EURUSD analysis
A strengthening U.S. economy and talk of possible interest rate tightening sooner than expected by the U.S. Federal Reserve is helping to pressure the EUR USD this week.
At the end of last week, the U.S. government reported a better-than-expected Non-Farm Payrolls report. This led some traders to assume that the Fed would take a “wait-and-see” approach before applying another round of quantitative. Additionally, some speculators were betting that the Fed would change the language of its monetary policy statement to reflect an improving economic outlook.
Although the European Central Bank is holding its benchmark interest rate at 1.00 percent, the uncertainty over sovereign debt and the possibility that the Fed would refrain from implementing additional financial aid programs caused some traders to pare their long EUR USD positions. This action has been pressuring the Euro all week while supporting the greenback.
On Tuesday, the Federal Open Market Committee met to discuss monetary policy. After the meeting it was revealed that the Fed acknowledged signs of a strengthening economy. This brighter U.S. economic outlook is helping the dollar as it is encouraging investors to downplay expectations of future stimulus measures. Read More