With a drop of 25 basis points, the Fed's decision was seamless. However, the speech given by Jerome Powell seems to have somewhat spoiled the end of year party. He in fact noted that inflation was not following the expected trajectory and that as it stood, the pace of rate cuts could not continue. The members of the monetary policy decision-making committee anticipate only two rate cuts in 2025 compared to the previous double while raising their forecast for inflation and growth, all while the labor market remains resilient. Translation for currency traders, the spread between the returns of the dollar and those of the euro could further widen favoring by extension (carry trade oblige) the greenback.
THowever, everything is not lost. The American 10-year is close to 4.55%, the overflow of which would open the way to 5.00%. In fact, only the break of 1.0335 on the EURUSD will confirm the exit from the bottom of a horizontal congestion underway since 2023 with the corollary of a continuation of the decline below parity. In the meantime, the first resistance lies at 1.0635.
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