The market is certain that the Federal Reserve will cut interest rates during tomorrow’s meeting, with a small chance of a 50 bps reduction priced in.
Two Fed policymakers, Chris Waller and Michelle Bowman, may be thinking of this FOMC meeting as an audition to take over the Fed Chair from Jerome Powell, which means they might push for a 50 bps cut tomorrow to impress President Trump (who thinks interest rates are 300 basis points too high at the moment).
Additionally, Trump stooge Stephen Mirin was added to the voting Fed board yesterday, just in time to push for an outsized interest rate cut.
This speculation is likely contributing to the recent rise in EUR/USD. Today’s movement has taken the pair above the prior yearly high at 1.1829, which was set in late July.
This breakout signals the potential continuation of the bullish trend, with the next possible resistance coming into focus at the double swing highs from August 2021, around 1.1900.
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