EUR/USD traded on an upbeat sentiment on Wednesday as the dollar (DXY) repositions ahead of the Fed verdict. Meanwhile, “Super Thursday” will play a critical role in the euro’s near-term price action due to the upcoming ECB meeting. That said, central bank divergence themes will drive the near-term price direction for the pair.
The EUR/USD recently recorded a bounce off the 1.1250 support and aims to tap the 1.1300 and 1.1350 after that.
US Dollar Could Spike on Favorable Fed Outcome
At press time, ‘fiber’ trades at 1.1275 as the EUR picks up some bullish steam. However, the outcome of this week’s central bank meeting could strengthen the dollar significantly depending on decisions and comments made.
Meanwhile, the US Producer-Price index rose by 0.8% in November, indicating that inflation in the US could remain at high levels well into 2022. However, with the surprising recording of +9.6% YoY, US yields jumped with the report and exceeded forecasts, and recorded their highest stride since the major change in the index in 2009. The 2-year government bond increased by 0.02%, from 0.64% to 0.66%, while the 10-year bond yields grew from 1.42% to 1.44%.
That said, speculators expect Fed policymakers to announce an acceleration of the winddown of monthly bond purchases as inflation blows hot.
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