Due to problems in the Eurozone and disagreement between FED and Euro bank, the EUR/USD pair dropped by 0.87%. While Dollar, GBP/USD and USD/JYP experienced a rise in value.
On Friday, the EUR/USD pair dropped by 0.87%. The attempt to go higher than the November level failed because the Federal Reserve and the European Central Bank had different views. Problems in the eurozone and the NY Fed President John Williams’ disagreement with the Fed’s decision on Wednesday also added to the issue.
The dollar and Treasury yields were slightly boosted because Atlanta Fed President Raphael Bostic said he only sees two cuts in interest rates next year. Even though they tried to control the reactions, the futures market still thinks there’s a 76% chance of a Fed rate cut in March and an expected total of 150 basis points in cuts by 2024.
Despite the European Central Bank trying to stop rate cuts, the futures market thinks there’s a 50-50 chance of a cut in March, predicting 150 basis points in cuts by the end of 2024, just like the Fed. After Williams spoke, the rebound in Treasury yields didn’t last. U.S. data, like the New York Fed’s Empire Index dropping and a slight 0.2% improvement in industrial output, wasn’t as good as expected.
Sterling fell by 0.7%, undoing its gains when the UK did better than expected. GBP/USD rose after the Fed and Bank of England meeting stopped at 1.2800. The increase might be paused if it doesn’t go above that soon.
USD/JPY increased by 0.2%, but its recovery after the Fed’s decision and the big fall in November-December hasn’t exceeded the 200-day moving average. Amidst the talk of Fed rate cuts, it might face significant challenges if the Japan rates rise next year. The upward trend seen in 2023 could drop after the Bank of Japan’s announcement on Tuesday and the end of the year.