The Fed looks to implement second 0.75 point rate rise amid uncertainty over the next steps.
Commentary On The Fed’s 75 Basis Point Hike
Shaun Murison, Senior Market Analyst at IG comments on what this means:
“The outlook for Europe is gloomy enough, without high inflation, but with the US heading in the same direction, it looks like we have more reasons to be worried. While CPI inflation recently hit a 43-year high in the US prompting the suggestion of a 100 basis point move, these fears have since been quelled by Fed members. A 75 basis point hike is however still considered large, and the targeting of inflation remains at the likely cost of growth and employment. When we look at recent falls in commodities like oil and copper (often considered a leading indicator of economic health), the suggestion is that growth will slow further and recession could be an unfortunate end result.”
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Axel Rudolph, Market Analyst at IG also comments:
"EUR/USD continues to oscillate around the $1.02 mark as traders await the Federal Reserve’s (Fed) Federal Open Market Committee (FOMC) meeting on Wednesday which is to shed more light on its tightening path. Support can be spotted between the mid-August high and Friday’s low at $1.013 to $1.0122 and resistance at last week’s $1.0278 high. Much more significant resistance can be found in the $1.034 to $1.036 zone which consists of the December 2016 and January 2017 as well as the May and June 2022 lows. Were a renewed descent to take the cross below $1.0122, parity would be back in play. Below it the current July trough sits at $0.9952. Failure there would engage the $0.9698 to $0.9593 support area which is comprised of the June 2000 and February 2001 highs and the September 2002 low."
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