What will happen to the Euro after the fed meeting
The currency pair EUR/USD is reasonably considered basic in the Forex market. Try to find out what are the main drivers for this pair, and how things could develop in the future.
The Euro managed to successfully avoid (so far) a number of potential dangers, such as Greek debt problem, a new unpredictable Italian government and the situation in Catalonia. The Eurozone economy showing signs of recovery, inflation has finally reached the target of 2 percent, and growth remained decent. Unemployment is falling, while elevated levels in the peripheral countries hold her higher than average in the West.
All these factors allowed the ECB to start talking about tightening and confidence in the prospects for further recovery. QE is scheduled to end in late 2018 and tougher, according to forecasts, will begin after the summer of 2019, though it can probably be changed.
On the American side, the fed continued on its path of raising the stakes. US inflation reached 2%, unemployment is near record lows while GDP growth remains steady and is expected to remain relatively strong in the future. So, what are the potential risks for this pair? For the Euro situation seems to be recovering, but the main danger remains. This is the fundamental problem of the Eurozone, which represents the division between North and South, in terms of economic power, unemployment and productivity.
For the dollar the main problem in the short term is the aggressive trade policy of the administration trump. The United States launched a trade war with some very strong opponents such as China, and these actions may damage the future potential of the United States. The NAFTA negotiations are progressing, but a positive result is not achieved.
From a fundamental point of view it is difficult to have a clear idea about the EUR/USD. There are risks on both sides, and although the most likely short-term direction is up, there are too many unknowns that can aggressively move this pair in either direction.
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