Summary:
- The Fed is expected to tighten monetary policy further.
- BoE is expected to raise interest rates.
- RBA raises interest rates for the first time since 2010.
- SNB remains dovish in their fight against inflation.
EURO expected to weaken further against the USD.
Market sentiment is bearish for this currency pair, the market sentiment comes as market participants await the Fed’s interest rate announcement, investors expect a further 50 bp rise in interest rates which will result in a stronger US Dollar. Prices are continuing to rise despite the hawkish Fed, if this continues after the next interest rate increase, there could be trouble for the USD.
EUR/USD Price Chart
GBP showing further strengthening potential against the EUR.
The EUR has been weakening against the GBP since the market opened this morning. The GBP strengthening against the EUR comes with expectations that the Bank of England (BoE) is expected to increase the interest rate yields by 25bps. The European Central Bank (ECB) is still behind the United Kingdom when it comes to tightening monetary policies, causing the EUR to weaken. The current market sentiment for the currency pair is bearish.
EUR/GBP Price Chart
The Reserve Bank of Australia raises interest rates for the first time since 2010.
Since the market opened this morning, the price of the AUD/USD has increased by more than 0.3%. Market sentiment for this currency pair is mixed. The AUD is not giving the USD more opportunity to strengthen. The Reserve Bank of Australia raised their interest rates for the first time since 2010, the tightening of monetary policy comes in an attempt to fight the rising inflation. The AUD is a risk asset, which means its price is levered to commodities. The US Dollar is expected to pull back against the AUD as the world slows down and the hawkish Fed continues its war against inflation.
AUD/USD Price Chart
CHF Weakens as SNB remains dovish.
The US Dollar is expected to strengthen against the Swiss Franc with the market sentiment showing bullish signals. The continuing hawkish attitude of the Fed and the dovish attitude of the Swiss National Bank (SNB), means the strengthening of the USD against the CHF is likely to continue.
USD/CHF Price Chart
Source: finance.yahoo.com, dailyfx.com
