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Central bank meetings weigh on forex market

18th Sep 23 2:27 pm

This week is packed with central bank meetings as decisions on interest rates and monetary policy direction are eagerly anticipated by forex traders.

The dollar remains strong among major currencies, nearing its March resistance level. Economic resilience and the prospect of high interest rates for an extended period could support the dollar’s upward trajectory.

The U.S. Federal Reserve is expected to announce its interest rate decision on Wednesday, with a focus on its stance on inflation, which will impact the dollar’s direction.

The euro is showing signs of stability after a turbulent week marked by significant announcements and a 25-basis point interest rate increase by the European Central Bank, although the institution adopted a softer stance.

The pound could continue to face selling pressure and could be heading toward the lows it recorded in May as economic concerns could weigh on its performance.

The Bank of England (BoE) could raise interest rates by 25 basis points during the upcoming Thursday meeting to fight elevated inflation.

Concerns about economic growth could put pressure on the BoE and affect monetary policy direction, making the pound vulnerable to further selling pressure.

Traders could monitor the release of the UK CPI data one day before the central bank’s meeting. The release could fuel some volatility.

The yen’s position remains unchanged compared to last week. All eyes are on the Bank of Japan’s policy meeting which is scheduled on Friday as traders could monitor the central bank’s potential comments on moving away from its ultra-loose monetary policy and negative interest rates. In this regard, the yen could see limited developments during the next few days.

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