EUR/USD is at risk of falling below August low at 1.1664 and exposing 1.16 – TDS

Fed Chair Powell surprised by signaling taper announcement could come in November. The USD moderately strengthened after an initial move lower. Short-term, the risk is for additional follow-through in USD firmness, which could threaten the sub-1.17 lows in EUR/USD, according to economists at TD Securities.

See: EUR/USD targets the 1.1664 August low – Commerzbank

No "lift-off" till end-2023

“Fed officials signaled that they expect to start QE tapering in November and that the process is likely to be completed by around mid-2022.” 

“Views on the funds rate were mixed, but dot-plot projections moved up: the median is now 0.25% at end-2022 (up from 0.125%), 1.0% at end-2023 (up from 0.625%) and 1.75% at end-2024 (newly added).”

“We now expect the $120bn-per-month QE program to be wound down at a $15bn-per-month pace, over eight months, starting in November. We don't expect the first rate hike until the end of 2023.”

“Short-term, the risk is for additional USD firmness follow-through, putting the 1.1664 low in EUR/USD in jeopardy of breaking and exposing 1.16.”