A key U.S. money market indicator | 15 Maret 2022

15 Maret 2022, EUR/USD

EURUSD trading plan:

A key money market indicator is now pricing U.S. interest rates peaking at a higher level than previously forecast, as traders bet that the Federal Reserve will prioritise stamping out inflation over fretting about risks to economic growth. A quarter-point increase is seen as a done deal at the Fed's Wednesday meeting, with another six or seven moves expected this year. Traders are also re-assessing the "terminal" rate - the point where the federal funds rate will peak. Currently, the expectation is for the terminal rate to be hit in the second half of 2023, and on Monday, the implied yield - essentially a proxy for the fed funds rate - on September 2023 Eurodollar contracts rose to 2.57%. That is up 57 basis points in a week, and up 100 bps this year. This is a positive signal for the dollar.

Investment idea: sell 1.1010 and take profit 1.0933.

David Johnson
Analyst of «FreshForex» company
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