EUR/USD Price Outlook: Dovish FOMC Statement Propels EURUSD HigheThe FOMC statement and economic projections released yesterday was perceived as dovish as the Fed opened the door to a pause with its changed language in its forward guidance. Previous statements included “ongoing increases in the target range may be appropriate”, whereas yesterday’s statement replaced such wording with, “…some addition policy firming may be appropriate” – to reflect a step down in motivation to hike rates furthe banking system remains resilient and the Governing Council remains open to further hikes. The ECB is still behind the curve both in the level of interest rates and in terms of seeing stronger signs of disinflation throughout the euro zone. Multiple ECB officials have expressed concern that current, low expectations of the policy rate diverge from ECB thinking – which suggests more upside potential for the euro.
Markets foresee a terminal rate of between 3.25% and 3.5% with no anticipation o