Fed and ECB decisions fall a day apart for a Euro under 1.12

Germany's Ifo survey beat its forecast on Monday, and EUR/USD was back under its pre-release level by the 11th five-minute bar. Dollar buying ahead of the Federal Open Market Committee (FOMC) meeting, which ends Wednesday, then took it to its lowest since October 15. It ended at that low, below 1.1200 for the first time since October 14.

The US two-year yield rose to about 4.71% before the Fed's meeting. The Fed's 3.75%-4.00% range is already well above the European Central Bank (ECB) deposit rate of 2.50%. Futures put a December Fed hike near 80%, which would widen that gap in the Dollar's favour.

The Ifo business climate rose to 90.2 against an 89.8 forecast, with expectations up to 91.6 from 90.4 and the current assessment down to 88.8 from 89.5. A firmer German outlook adds to the case for the December ECB hike that 64 of 73 economists in a Reuters poll expect. EUR/USD's rise on the release was less than a quarter the size of the fall that followed it.

On the calendar

US durable goods orders at 12:30 GMT on Tuesday are forecast up 0.6% after a 0.1% fall. A hold is expected in the Fed's 18:00 GMT statement on Wednesday. Fed Chair Warsh takes questions at 18:30 GMT, with the December hike the open question.

ECB President Lagarde speaks at 17:00 GMT on Tuesday, after the ECB's bank lending survey at 09:00 GMT. The ECB announces at 13:15 GMT on Thursday, with the deposit rate expected to stay at 2.50%, and its December decision is the Euro's side of the rate gap.

On the charts

Monday's drop gave back about three-fifths of the bounce off the October 14 low just above 1.1100 to the October 16 high just above 1.1250. EUR/USD is below its 50-day Exponential Moving Average (EMA), just above 1.1350, and its 200-day, just under 1.1500, and both have fallen in every session since mid-September.

EUR/USD 5-minute chart