EUR/USD Treads Water Ahead of Fed Rate Decision
The EUR/USD pair is trading around $1.1536 on September 16 after a sharp decline from the 1.1630-1.1640 area ahead of today's key event: the Fed's interest rate decision.
Market expectations are that the Fed will raise rates by 25 basis points, which would bring the current range of 3.50-3.75% to 3.75-4.00%. The probability of this move is estimated at 90-93%, indicating that the hike itself is already largely priced into the dollar.
However, the updated dot plot and comments from Fed Chair Kevin Warsh will be crucial in determining whether today's decision marks the beginning of a series of rate hikes or a one-off response to inflation risks.
The labor market is not yet giving the Fed an obvious reason to remain on hold: the economy added 162K jobs in August, while the unemployment rate remained at 4.1%. The ECB tightening provides partial support for the euro, which has risen from the beginning of September due to the regulator's decision to raise the deposit rate by 25 bp to 2.50%.