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Euro Latest – EUR/USD Driven by Energy Fears and FOMC Outcome

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Euro Latest – EUR/USD Driven by Energy Fears and FOMC Outcome

Jul 27, 2022 | DailyFX
Nick Cawley, Strategist

EUR/USD Price, Chart, and Analysis

  • FOMC decision and Fed chair Powell’s presser are the day’s highlight.
  • Gazprom cuts its gas supply further.

The FOMC monetary policy decision later today is expected to see the Fed hike rates by 75 basis points, a similar move to the last meeting on June 15, taking the Fed target rate to 250-275 basis points. Markets’ probability for this move is around 75%, while a 100 basis point hike is given a 25% probability. The post-decision press conference by Fed chair Jerome Powell will need to be closely followed for any clues as to how the central bank is looking to handle the twin problems of rampant inflation and flagging growth.

The energy crisis in Europe continues unabated with gas supplies cut further today. Earlier in the week, Russian energy giant Gazprom said that it would cut Europe’s gas supply in half today to 33 million cubic meters a day, just 20% of the Nord Stream 1 pipelines capacity, citing technical reasons for the reduction. Any further reduction in the flow of gas would hit an already weak Euro Zone further. Yesterday the European Union announced plans for a voluntary 15% reduction in gas usage from August through to the end of March 2023 across the single-block, although some member states were given agreed opt-outs.

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