EUR/USD at Two Week Low at 1.3650 as Fed Begins Tapering

The dollar climbed to the strongest level in almost two weeks against the euro as investors assess Federal Reserve plans to wind down bond-buying next year amid signs that economic growth is gaining momentum.

The U.S. currency advanced versus most of its 16 major counterparts after the Federal Open Market Committee said yesterday it would slow monetary stimulus to $75 billion a month from $85 billion. South Korea’s won led declines in emerging-market currencies amid speculation the U.S. central bank will keep reducing stimulus that has boosted asset prices around the world. The yen strengthened as Bank of Japan policy makers started a two-day meeting.

“The dollar has taken a lot of strengthening from the tapering news, and I do expect it to continue,” Fabian Eliasson, head of U.S. currency sales in New York at Mizuho Financial Group Inc., said in a phone interview. “On a marco level, the U.S. is decreasing its stimulus program, when you have the BOJ to increase it, and to initiate a new round of quantitative easing. Same thing goes for Europe.”

Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.