Markets freeze in anticipation of Powell's press conference
On Tuesday, January 25, at the end of the day, the single currency fell against the US dollar by 0.22%, to 1.1301. The dollar index rose to a multi-month high of 96.26 points. The growth took place against the backdrop of a decline in the euro/dollar pair, since the share of the euro in the calculation of the index is 57.6%.
Germany's higher-than-expected IFO failed to support the single currency.
The pair remains under pressure on the back of a strong dollar due to increased geopolitical tensions and an ambiguous situation in the US debt and stock markets.
Scheduled statistics (GMT +2):
At 11:00 Switzerland will publish the index of economic expectations of institutional investors from Credit Suisse for December.
At 15:30 in the US, the trade balance for December will be released.
At 17:00 the Bank of Canada will announce its interest rate decision.
At 17:00 US will publish data on sales in the primary housing market for December.
At 17:30, the US Department of Energy will publish a report with data on stocks of oil and petroleum products.
At 18:00 there will be a press conference of the head of the Bank of Canada.
At 21:00, the US Federal Reserve will announce a decision on rates
At 21:30 there will be a press conference of the chairman of the Fed.
At the time of writing, the major currencies are trading in the positive area. The euro is worth 1.1301 and is trading below the balance line (SMA55). The focus remains on the two-day Fed meeting. The central bank may accelerate steps to raise interest rates and reduce its holdings in US Treasury bonds, which have increased the balance sheet to $8.8 trillion.
Considering that the market has included in prices a threefold increase in rates in 2022, after the speech of J. Powell, the dollar may lose ground on all fronts as part of a correction.
News arrived this morning that China Evergrande Group will hold an investor call at 13:00 GMT on Wednesday. For risky assets, this is great news as the company tries to avoid default and restructure debt.
On the hourly timeframe, the euro/dollar pair continues to trade in the range of 1.1220-1.1385. The range for the evening session is 1.1195-1.1420.
Summary: on Tuesday, the euro closed slightly in the red. In the American session, buyers recovered most of the losses from the low of 1.1263. Investors are waiting for the decision of the US Federal Reserve and the press conference of George Powell. The Central Bank is expected to leave rates unchanged, while Powell will clarify future steps to curb high inflation in the country. The range for the evening session is 1.1195-1.1420.