Markets are pricing three 25 bps rate hikes by both the Fed and the ECB this year, and that leaves the EUR/USD rate range-bound, economists at Société Générale say,
A big EUR/USD rise is very unlikely now
The market is pricing three 75bp rate cuts from the Fed and ECB this year and what matters is firstly how those expectations evolve and secondly, how expectations about policy evolve for 2025.
For now, EUR/USD is marginally more likely to drift higher than to fall much, as gradual synchronised easing reduces the appeal of the dollar. But a big EUR/USD rise is very unlikely now, because it would require significantly more Fed than ECB easing.
By contrast, the risk into 2025 is that the Fed tightens again, long before the ECB does. That would echo the experience of the Great Moderation, when 1995 rate cuts were reversed in 1997, and 1998 cuts were reversed in 1999/2000. That’s the last time the Dollar was at current levels in trade-weighted terms.
Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.
Hot
No comment on record. Start new comment.