Following the German Bundestag's 2/3 majority approval of the massive fiscal package, EUR/USD stabilized above the 1.09 mark, according to Jens Naervig Pedersen, FX analyst at Danske Bank.
Risks remain skewed upward.
"The markets mostly anticipated this, therefore the EUR/USD reaction was subdued. In a vote on Friday, the package must now also pass the Bundesrat, the parliament's upper house. The bill is anticipated to pass here as well.
"The FOMC meeting is the main focus today, and we do not expect any significant market reactions. Powell is unlikely to provide an explicit cut guidance in May, but we still expect three 25 basis point reductions later in the year, beginning in June.
"In the short future, we anticipate that EUR/USD will stabilize around current levels, with risks remaining biased upward. The main danger to continued EUR/USD rise is that the USD may quickly recover if incoming data does not confirm market concerns about the US economy.
Risks remain skewed upward.
"The markets mostly anticipated this, therefore the EUR/USD reaction was subdued. In a vote on Friday, the package must now also pass the Bundesrat, the parliament's upper house. The bill is anticipated to pass here as well.
"The FOMC meeting is the main focus today, and we do not expect any significant market reactions. Powell is unlikely to provide an explicit cut guidance in May, but we still expect three 25 basis point reductions later in the year, beginning in June.
"In the short future, we anticipate that EUR/USD will stabilize around current levels, with risks remaining biased upward. The main danger to continued EUR/USD rise is that the USD may quickly recover if incoming data does not confirm market concerns about the US economy.
