Fundamental analysis

US Treasuries and stock futures will determine the direction of dollar (look out for a decline in EUR/USD and and increase

Stocks continued to rally, thanks to the positive reaction of investors over the possible reduction of the growth rate of interest rates. Many believe that when the Fed meetings begin, members will actively discuss the gradual decrease of rate hikes, for example, by only 0.50% in December, then by 0.25% in the succeeding months. These sentiments are the main driver of bullish movements, especially since other world central banks may follow such changes.

Most likely, the growth of stock indices will continue as Treasury yields are stabilizing. But the pace may slow down as the trend was turning bearish before the opening of the European session. Rally may resume during the US trading session.

In short, the main drivers of markets are the movement of Treasury yields and US stock indices. If yields continue to decline, while US stocks increase, dollar will fall. But if the opposite happens, dollar will rise against all major currencies.

Forecasts for today:

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EUR/USD

The pair is trading below 1.0000. If market sentiment shifts to negative, the pair will reverse and drop below 0.9940. It may fall towards 0.9860.

USD/CAD

The pair is trading above 1.3585 ahead of the meeting of the Bank of Canada. If the central bank raises rates by another 0.75%, market sentiment will deteriorate further, which will lead to a rise to 1.3700.

The material has been provided by InstaForex Company – www.instaforex.com


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