The Euro continued to edge higher in Tuesday trading after a day of profit taking as investors await the outcome of the Federal Reserve Bank policy meeting to gauge expectations on the possible timing of an increase in interest rates. Investors are speculating that the Fed’s policy will continue to diverge from that of its major peers; in other words, a timeline for further tightening from the Fed while other central banks such as the Bank of Japan and the European Central Bank embark on additional easing.
As reported at 9:47 am (EST) in London, the EUR/USD was trading at $1.13455, a gain of 0.9% and moving away from Monday’s 11-year low which occurred after the outcome of the Greek election was announced. FX traders are hopeful that there will be a willingness to negotiate on the part of the Syriza party which would hopefully leave Greece within the Eurozone.
FX Players to Watch Yellen’s Presentation
Market players will watch for how the Federal Reserve, through its chief Janet Yellen, presents its decision; as one FX strategist puts it, if the Fed remains quiet that will likely be taken as a “go” for a rate hike which could result in a selloff in the EUR/USD pair and push the Euro through the $1.15 level. Since last week, the Euro has lost nearly 500 pips against the Dollar.