EUR/USD: Examples of things that could get the market moving are US treasury yields moving out of the range on data improving or deteriorating
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Forex market seems to be quite resilient and we're wondering what's ahead EUR/USD. Let's hear from Saxo Bank's John Hardy who we reached out to.
FXMAG.COM: Do you expect any radical moves of EUR/USD price in the near future? What can cause such fluctuations?
John Hardy (Saxo Bank): We are awaiting more market volatility. The EURUSD has come down as the market excitement about the anticipation that the ECB is set to continue hiking while the Fed is headed for a pause has died down (and looking forward, it is hard to stretch the market's anticipated relative policy rates any further, with the Fed and ECB supposedly having approximately the same policy rate by late 2024 according to current market forward pricing). Examples of things that could get the market moving are US treasury yields moving out of the range on data improving or deteriorating. The debt ceiling issue is also very important and causing everyone to pause at the moment.
Once the debt ceiling debate is resolved, I would expect that the US dollar rallies for a time because USD liquidity will decrease as the US treasury rebuilds its reserves
John Hardy (Saxo Bank): Once the debt ceiling debate is resolved, I would expect that the US dollar rallies for a time because USD liquidity will decrease as the US treasury rebuilds its reserves. And I have a hard time understanding what the US dollar does if the debt ceiling stand-off gets particularly bad – no big EURUSD angle on that – perhaps more of a USDJPY impact (lower).
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