Monetary policy expectations reversal: Policy advantage weakening
After the Fed's interest rate cut decision in October, the policy expectations have undergone a significant shift. Powell explicitly stated that the interest rate cut in December "is not a certainty", and a rare divergence emerged in the voting process, with "hawkish opposition to the rate cut and dovish advocacy for a more substantial rate cut", indicating that the internal debate within the Fed regarding the easing pace has intensified. The market's expectation for an interest rate cut in December has dropped from 90% to 55%. If subsequent US economic data marginally improve, it may even trigger a restart of the rate hike expectation.
In contrast, the European Central Bank maintained a 2% interest rate unchanged, but there is a concern of a rebound in core inflation in the Eurozone. The core inflation in September was 2.8%, still above the 2% target, and the fluctuation in energy prices may again push up overall inflation. The market expectation for the ECB to "maintain the interest rate until 2027" has weakened. This "reduction in the expectation of US rate cuts + doubt over the stability of the European foundation" is weakening the policy gap logic that previously supported the euro.
Euro-dollar trading strategy
sell：1.15500-1.155400
tp:1.15000-1.14500
sl:1.16000
After the Fed's interest rate cut decision in October, the policy expectations have undergone a significant shift. Powell explicitly stated that the interest rate cut in December "is not a certainty", and a rare divergence emerged in the voting process, with "hawkish opposition to the rate cut and dovish advocacy for a more substantial rate cut", indicating that the internal debate within the Fed regarding the easing pace has intensified. The market's expectation for an interest rate cut in December has dropped from 90% to 55%. If subsequent US economic data marginally improve, it may even trigger a restart of the rate hike expectation.
In contrast, the European Central Bank maintained a 2% interest rate unchanged, but there is a concern of a rebound in core inflation in the Eurozone. The core inflation in September was 2.8%, still above the 2% target, and the fluctuation in energy prices may again push up overall inflation. The market expectation for the ECB to "maintain the interest rate until 2027" has weakened. This "reduction in the expectation of US rate cuts + doubt over the stability of the European foundation" is weakening the policy gap logic that previously supported the euro.
Euro-dollar trading strategy
sell：1.15500-1.155400
tp:1.15000-1.14500
sl:1.16000
Zlecenie aktywne
Expectations of interest rate cuts have cooled down, and the euro is being shorted.
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Wyłączenie odpowiedzialności
Informacje i publikacje nie stanowią i nie powinny być traktowane jako porady finansowe, inwestycyjne, tradingowe ani jakiekolwiek inne rekomendacje dostarczane lub zatwierdzone przez TradingView. Więcej informacji znajduje się w Warunkach użytkowania.