Markets price 40-45 basis points of Fed hikes by year-end, pressuring EUR/USD
Markets are now pricing 40-45 basis points of Federal Reserve rate hikes by year-end following hawkish Fed messaging, weighing on the euro against the dollar as the pair started the week softer.
Markets are pricing 40-45 basis points of Federal Reserve rate hikes by the end of the year following a hawkish shift in Fed messaging last week. The euro started the week softer against the dollar, surrendering part of Friday's rebound as investors continued to digest the policy pivot.
The repricing came after Fed policymakers signalled a more hawkish policy outlook than markets had anticipated, leaving EUR/USD under pressure despite a brief stabilisation toward the end of last week. The dollar gained ground across major currency pairs as traders adjusted rate expectations higher.
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