EUR/USD CONTINUES TO OSCILLATE ABOVE 1.0700 AS INVESTORS PREPARE FOR FED POLICY

EUR/USD is continuously juggling in a narrow range above the round-level support of 1.0700 in the Asian session. It seems that investors have been sidelined ahead of the interest rate decision by the Federal Reserve (Fed). Therefore, the major currency pair is mimicking the pre-Fed policy period and is likely to continue its sideways performance.

S&P500 futures are adding further gains, carry forwarding the recovery performance on Monday as investors cheered liquidity assistance from various financial institutions to First Republic Bank after solvency issues. It seems that investors are showing maturity in efforts made for easing financial instability, portraying a recovery in the risk appetite theme.

The US Dollar Index (DXY) is also demonstrating a lackluster performance around 103.30 as the street looks confused about the Federal Reserve’s monetary policy. The commentary has come from Futuristic carmaker Elon Musk that the Federal Reserve should cut interest rates by at least 50 basis points (bps). The rationale behind the commentary could be an expected recession due to sheer policy tightening.

Meanwhile, demand for US government bonds still looks weak as the return offered looks solid at higher levels. The 10-year US Treasury yields have been recorded at 3.5%, at the time of writing. Yields have been supported after the promise of a liquidity influx of $30 billion by various financial institutions to support the First Republic Bank