EUR/USD Consolidates Amid Divergent Central Bank Signals: How to Trade it

investing.com:

Over the past 8 days, several key factors, from the recent Fed meeting to US economic data and a series of statements by Federal Reserve board members, have halted the EUR/USD pair's resurgence. Currently, the pair finds itself amidst a broad correction, but there's still a possibility that the uptrend could resume.

However, this momentum has somewhat slowed due to cautious statements from Fed officials, suggesting a swift Fed policy pivot is unlikely. Market probabilities indicate the interest rate cut cycle may commence around mid-2024. What's coming into sharper focus now are the GDP readings, revealing the surprising strength of the US economy, a stark contrast to earlier-year predictions of a continuous march towards recession.

Fed members have been active this week, sharing insights on the current monetary policy. Michelle Bowman, a prominent hawk, has maintained her stance, emphasizing the necessity to continue the cycle of interest rate hikes. This is despite promising new data in the fight against inflation.

Neel Kashkari of Minneapolis has echoed similar sentiments, highlighting the strength of the U.S. economy and stressing the need for additional Federal Reserve intervention to bring inflation down to the defined 2% target. On a more general note, Austan Goolsbee expressed satisfaction with the Fed's work so far, while Deputy Secretary Christopher Waller conveyed that sustained high economic growth demands increased attention.

Thus, there is a conspicuous lack of dovish phrases, which increases the likelihood of the Fed keeping interest rates at current levels for at least the next six months with the door open for one more hike.

According to the latest readings, GDP from the U.S. economy grew