The euro has reversed the trend during the session on Tuesday and was higher against the dollar at the end of the day in a market awaiting the outcome Wednesday of a monetary policy meeting of the federal Reserve (Fed).
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Around 19: 00 GMT (21: 00 in Paris), the euro gained 0.44 per cent against the greenback, to 1,1344 dollar. “The dollar is folded while the attention of market participants are turning to the Fed,” said Fawad Razaqzada, an analyst for ThinkMarkets. They “will ask whether the central bank will continue at full throttle its programmes of support to the economy, to the extent that the markets are in a substantially straightened and where the indicators are much improved, as we saw with the surprise drop in the unemployment rate (in may in the United States) announced on Friday”, says the specialist.
If the chairman of the Fed Jerome Powell “suggests that the program of asset purchases will slow down, then we could begin to see the equity market pull back and see a repeat of the ’taper tantrum'”, avance-t-il. During this episode, and in 2013, the markets had reacted strongly when the chairman of the Fed, when Ben Bernanke announced a gradual reduction in asset purchases. “This will support the dollar”, anticipates Fawad Razaqzada.
on the lookout for any signal on the trajectory of the next decisions
The monetary policy Committee of the Fed (FOMC) will meet on Tuesday and Wednesday, for the first time since the lifting of the containment measures in the United States. Observers do not expect specifically to ensure that its members are changing the interest rates but will be watching for any signal that is on the path of future decisions. They will be sensitive to the new economic forecasts provided by the institution and to the comments of Jerome Powell at the press conference which will mark the end of the meeting. Currently, “the market has no clue on the actual duration of the recession post-Covid and on the strength of the rebound to come,” says Fiona Cincotta, senior analyst for City Index.
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