Euro dips ahead of Fed meeting

The euro is slightly lower versus the US dollar as traders await the Federal Reserve meeting at 6pm (London time).

The euro is trading at $1.3919, down 0.1%, ahead of today’s Fed meeting.

Germany held a successful ten-year bond auction this morning, and the cost of borrowing for the Berlin government dropped from 1.64% to 1.58%. A decline in the cost of borrowing suggests increased investor confidence in Germany’s ability to repay, which is positive for the euro.

The situation in Crimea is still ongoing, even though Ukraine is not in the currency area many eurozone countries have exposure to. With questions remaining over Russia’s G8 membership status, the euro will struggle to break through the $1.4 mark.

The consensus for today’s meeting is for the Fed to trim the bond-buying scheme by $10 billion. The euro is finding support around the 200-day moving average of $1.3893; if Janet Yellen decides to hold off on tapering, we could see the euro head towards the $1.40 level. 

Spot FX EUR/USD chart

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