Ella 
Relatively strong U.S. economy to weigh on EUR/USD
The Fed raised interest rates by 25 basis points to 5.25-5.50%, in line with broad market expectations. We have not changed our expectations for the Fed and still see this as the last rate hike in the current cycle.
Powell’s tone was balanced as he gave few fresh signals on the future outlook for interest rates. The market’s interpretation of this is slightly dovish, as the latest “dot plot” in June still clearly supports one more rate hike after July.
The Fed delivered no surprises, so we have no reason to change our FX view. We maintain our strategic view of a lower EUR/USD.
We expect the relative strength of the US economy to weigh on EUR/USD in the coming months and we continue to forecast 1.06/1.03 for the pair in 6/12 months. Today, we expect a relatively muted market reaction to the ECB meeting. EUR/USD could move lower if the ECB does not provide any firm indications of a September rate hike.
