The US currency still copes with obstacles quite easily and hardly slows down the run. The euro, seeking to behave in a similar way, often fails. However, the euro does not give up and hopes to recoup in the near future.
The greenback slightly declined against other world currencies on Wednesday morning, June 15, correcting after a long rise over several trading sessions. At the beginning of this week, the USD remained close to its 20-year peak ahead of the results of the Federal Reserve meeting. Recall that the central bank considered the issue of another increase in interest rates (by 75 bp) in order to curb galloping inflation. Market prices included a 75 bp rate hike with a probability of 99.7%, experts emphasize.
The dollar has been steadily rising for several months thanks to the fact that the Fed raised rates earlier than most other central banks. At the same time, the USD has received additional momentum in recent weeks, taking advantage of the desire of investors to find a reliable safe-haven asset that will not suffer from the rapid tightening of monetary policy.
The US currency showed a corrective trend on Wednesday morning, June 15, while the euro was able to bounce back a bit after a long drawdown. It should be noted that an emergency meeting of the European Central Bank will be held today, which was announced by the ECB Governing Council. The focus is on current market conditions in the eurozone. And so the EUR/USD pair rose moderately, trading near 1.0486.
At its June 9 meeting, the ECB's Governing Council kept interest rates at a record low of zero. In July, the central bank planned to increase it by 25 bp, and to resort to this measure again in September. However, the current situation requires more decisive and speedy methods of action.
Market expectations for a sharp rise in the key rate are also noted in relation to the Fed. In the face of growing expectations from the FOMC, the dollar index soared by 0.97%, reaching 105.20. This rise was recorded for the first time since 2002, analysts emphasize.
The Fed's decision will be announced later on Wednesday, June 15. And so investors in the dollar begin to take profits, as they are confident in the central bank's positive decision to raise the rate. The further course of the euro against the dollar will be determined by data on the trade balance and industrial production in the eurozone, which will also be published today.
According to experts, by September the ECB will raise the rate by 0.50%, and the Fed will follow the plan. Currently, the single currency remains under serious pressure. At the same time, the economic picture in the eurozone looks much bleaker than in America. It is very difficult for the EUR/USD pair to recover and approach the previous record high of 1.0800. The last support level for the EUR/USD pair before possible parity is 1.0350, and the resistance zone is 1.0600.
In the short term, the US currency expects some stagnation, since now it has nowhere to move. "The current aggressive pricing in the market increases the risk that the Fed's actions will not be considered hawkish enough," the US central bankers say. At the same time, analysts admit that following the results of the central bank's meeting, the greenback will give up part of its positions. However, the July meeting of FOMC representatives is able to change the dynamics of the dollar and send it to new heights.