Markets Ignore Fed Rate Pushback, GBP/USD and EUR/USD - buzzfeed.work
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GBP/USD, EUR/USD Prices, Analysis and Charts

  • First US rate cut is seen in March 2024.
  • US dollar pairs little changed in quiet trading conditions.

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A handful of Fed officials have been on the wires since the end of last week, pushing back against what they see as aggressive market pricing of up to six quarter-point interest rate cuts next year. Messrs Williams and Bostic last Friday started the move saying that interest rate cuts were not being discussed at present, while yesterday Cleveland Fed President Loretta Mester said that markets were getting ahead of themselves in pricing in rate cuts. Chicago Fed President Goolsbee suggested yesterday that markets were hearing what they wanted to hear and not what the Fed was saying.

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The latest CME Fed Fund rate probabilities show the US central bank cutting rates by 150 basis points next year with the first 25 basis point cut seen at the March FOMC meeting.

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US Treasury yields remain near multi-month lows with the 10-year benchmark stuck below 4%, while the 30-year long bond is looking to break below the same level.

US 10-Year Treasury Yield

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US 30-Year Treasury Yield

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The US dollar remains under pressure as government bond yields fall, with the US dollar index unable to regain recent losses. The dollar index continues to make lower highs and lower lows and a move back to the 78.6% Fibonacci retracement level at 101.17 in the near term cannot be ruled out.

US Dollar Index Daily Chart

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Two of the largest US dollar pairs, EUR/USD and GBP/USD, are trying to nudge higher but thin market conditions mean that any move is limited. Cable is trying to break back above 1.2700 after bouncing off the 38.2% Fibonacci retracement yesterday at 1.2628 with 1.2794 likely to cap any breakout.

GBP/USD Daily Chart

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EUR/USD is currently supported by all three simple moving averages after clearing the 20-dsma at the end of last week. Initial support for the pair from this sma at 1..0876 followed by the 23.6% Fibonacci retracement at1.08645. Resistance between 1.1000 and 1.1017.

EUR/USD Daily Chart

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Chart using TradingView

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Change in Longs Shorts OI
Daily 9% 0% 4%
Weekly -12% 10% -2%

What is your view on the US Dollar – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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