Nordea Research discusses EUR/USD outlook going into tomorrow's FOMC policy decision.

"A 25bp rate hike seems like a done deal on Wednesday and hence focus will turn to the Fed’s forward guidance, in particular if the dot plot will show 3 or 4 rate hikes in 2018. We expect a muted reaction in EUR/USD but see the pair lower in December.

If the fed funds rate is hiked by 25bp and the dot plot continues to indicate three hikes for 2018, we expect a rather muted market reaction. If four hikes are indicated, we would expect a small positive repricing of the Fed outlook," Nordea argues.

"We see several reasons why the USD could regain its footing even further in coming months. Withdrawal of USD liquidity ahead of New Year is one reason, while also the potential tax reform (and following repatriation of USDs from abroad) is another, Nordea adds.

Source: Nordea ResearchOriginal Article