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Euro falls against the dollar on expectations that the Federal Reserve will raise its interest rate

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The euro has lost position against the dollar since July 12as investors weigh the possible magnitude of an expected rise in interest rates in the Federal Reserve (Fed) At the end of the week.

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In this way, today Tuesday, July 26, the dollar index rose 0.714% to 107.180 and the euro fell 0.98% to 1.012 dollars, according to a Reuters report.

Everything points to the Fed raising interest rates on Wednesday by at least 75 basis points as inflation remains high.

The announcement of Federal Open Market Committee (FOMC) and Fed Chairman Jerome Powell’s subsequent press conference will also be closely watched as the market tries to gauge the possibility that this aggressive tightening will plunge the world’s largest economy and main engine of global growth into a recession

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Concerns about the state of the US economy have dampened some expectations about the Fed’s next monetary policy tightening, as traders worry that aggressive rate hikes aimed at cooling runaway inflation could cause growth to retrace.

These fears have helped support the dollar, which investors see as a relative safe haven, according to analysis reported on Investing.com.

The Fed is widely expected to raise interest rates by 75 basis points, with investors keeping a close eye on the central bank’s forward guidance as it grapples with high inflation and the potential for a recession. It should be remembered that last week the European Central Bank (ECB) raised rates by 50 basis points.

“The writing is on the wall for the euro. I know it’s been a punching bag for quite some time, but these growth concerns aren’t going to get any better, the energy crisis looks like it’s only going to get worse,” said Edward Moya, senior market analyst at Oanda in New York.

With information from Investing.com and Reuters.

Source: Larepublica

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