Euro stable ahead of Fed announcement

The euro is just shy of a three-week high versus the US dollar, as traders await news from the Federal Reserve meeting.

EUR/USD is trading at $1.3351, broadly unchanged on the day. Dealers are playing the wait-and-see game, reluctant to take a view on the market ahead of the Federal Reserve statement at 7pm (London time) tonight. The US central bank is expected to comment on the future of its current bond-buying scheme, worth $85 billion per month, which essentially involves printing more money to provide a boost to the country's economy.

The rate of unemployment has fallen in recent months, so it is a real possibility that the Fed will trim its bond-buying in an effort to make the US economy less dependent on the stimulus package. Some analysts are expecting the bond-buying programme to reduce by $10 billion. If the cut exceeds these expectations, we could see dealers sell EUR/USD. On the other hand, if there is no tapering by the Fed, traders may be more inclined to buy the euro versus the US dollar.

Spot FX EUR/USD chart

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