Article by ForexTime
EUR/USD remains bid, rising back above 1.1425 and bringing Thursday’s post-Fed peak at 1.1441 back into scope. U.S. yields also continue to fall pushing interest rate differential in favor of the Euro. The high is the best level seen in three weeks, and was the culmination of a 1.2% rally seen after the Fed’s decision to refrain from hiking, which was coupled with a more dovish than anticipated statement and dot plot. The Fed decided that international growth developments and declining inflation expectations where enough of a disincentive to raise rates.
The bias is likely to remain to the upside, for now, putting the focus on 1.1500 and the Aug-24 peak at 1.1714. But over time, the EUR/USD is more likely to decline than rise in the bigger picture. The ECB is likely to counter with its own version of dovish guidance, for one, while the market expectations for a Fed rate lift-off will shift to December.
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