ECB survives a currency war, eyes on Fed’s new mandate


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US Dollar Sundaram Highlights:

  • Fed to update on new mandate
  • ECB Another retest of 1.20 may simply have a co-signed euro
  • US Dollar Price Action Tech Has Improved On Rout

Since the beginning of the month, the major theme has opened to consensus trades, namely the Euro and Nasdaq 100, with the latter posting a 10% improvement from the all-time high on September 10nd. In turn, the renewed bout of instability has provided a new lease of life for the greenback. However, the question is whether this is the beginning of a physical enhancement or merely a corrective step, I with the latter. Said that, as the US election approaches a wider risk environment in favor of caution.

Economic calendar of america

America's Economic Calendar

Going forward, the focus will be on the Federal Reserve Monetary Policy Meeting (Wed 16)Th). However, with the average inflation targeting announced at the Jackson Hole Symposium, the Fed’s guidance is expected to be changed to reflect their new mandate to maintain interest rates at low levels, until the committee is convinced Inflation does not last longer than 2%. Along with this, the dot-plot is also likely to remain relatively unchanged.

Federal Open Market Committee dot plot

ECB may have co-signed the euro in another retest of 1.20

The hot topic for the ECB meeting was what is the committee’s view on appreciation in the euro in light of jobbing from Chief Economist Lane. While an ECB source reported at the time of the press conference that the euro would benefit from bidding in the GC euro, this was largely offset by Chief Legaard who noted that they would monitor the euro carefully. Although the ECB is clearly showing ease with gains in the euro and does not want to engage in a currency war, the central bank may have co-signed another move towards 1.20, thus making a run at the greenback in recent times. In advance capping. – Fed to Fed Meeting.

The US dollar has seen moves so far and the ECB has easily hinted at the strength of the currency, at least the path of resistance is high. However, one move in the greenback would be a firm break below the low trigger trendline resistance, which is the USD Affolat for now. In the short term, the US dollar range is 92.00–94.00.

US Dollar Chart: Weekly Deadline

US Dollar Chart

Source: DailyFX