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EUR/USD slips below 1.1700 as Fed hike odds fade
FedWatch pricing shows a 32.7% chance of a hike, down from 47% a month earlier, which keeps the dollar under pressure.
EUR/USD is modestly lower around 1.1675 in early Asian trading, after a sharp prior-session surge left the pair edging back under the 1.1700 level, according to FXStreet.
The dollar’s near-term outlook is being weighed by Federal Reserve meeting minutes released Wednesday, in which Fed officials said they would need to raise rates soon unless more progress is made on bringing inflation down, while the Fed held its benchmark rate at 3.5% to 3.75% at its July meeting.
At the same time, softer US inflation expectations appear to be limiting upside for the greenback, with CME FedWatch Tool pricing a 32.7% chance of a Fed rate hike at the upcoming policy meeting, down from 47% a month earlier.
In contrast, markets are pricing continued ECB tightening, with the ECB Watch Tool indicating a 90% to 94% probability of a 25 basis point hike to 2.50% on the next decision scheduled for September 9, supporting interest rate differentials tied to the euro.
On the chart, FXStreet notes EUR/USD is holding above the 100-day simple moving average and the Bollinger middle band, but the upper Bollinger band is near 1.1685 and RSI(14) remains above 70, suggesting upside momentum is stretched even as the pair drifts lower.
Latest closeEUR/USD 1.157 ▲0.4%