The dollar was firmer on Friday, albeit in thin and inactive markets. All eyes will be upon the FOMC meeting on Tuesday. It is a 99% certainty that rates will go up 0.25%.
The European Central Bank meet on Thursday, and with more hawkish comments from board members over the weekend, the market is now pricing in a 50/50 chance of a 0.25% rate hike before the year end. European rates currently stand at just 2%. A shift in the Euro rate outlook has been halting the Euro’s recent slide against the dollar, and could see gains for the Euro if this outlook is strengthened at the coming meeting. I don’t expect a rate hike this time, but the tone of the comments made will be key to Eurodollar price action over the next few weeks.
GBP EUR – Support 1.4650 then 1.4600
Resistance 1.4745 then 1.4810
GBP USD – Support 1.7715 then 1.7630
Resistance 1.7860 then 17900
DATA: UK Consumer Confidence (10:30 GMT)
Chicago PMI (purchasing manager’s index: 15:00 GMT)
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