EUR/USD: A 50 bps increase by the Fed and/or upward revision of the dots to smother bullish argument – SocGen

The ball for EUR/USD moves to the court of the Fed this week. Economists at Société Générale analyze how the FOMC meeting could impact the world’s most popular currency pair.

A smaller 25 bps rate increase or a pause by the FOMC to help EUR/USD

“A smaller 25 bps rate increase or a pause by the FOMC on Wednesday and minor (upward) revision of the dot-plot should, in theory, help EUR/USD to return to the upward trajectory of January.” 

“A 50 bps increase by the Fed and/or significant upward revision of the dots would be a major surprise and would backfire for risk assets and smother the bullish EUR/USD argument.”