EUR/USD Higher Ahead of FOMC Meeting

EUR/USD rallied today as traders were anticipating that the Federal Open Market Committee will announce an interest rate hike tomorrow. Today’s strong inflation data supported such outlook. The European Central Bank and the Bank of Japan will also make policy announcement later this week. Meanwhile, the meeting between the US and North Korean leaders ended with a pledge of friendship and steps toward denuclearization of the Korean peninsula, putting markets into a risk-on mode.
US CPI rose 0.2% in May on a seasonally adjusted basis, the same as in April and matching forecasts. (Event A on the chart.)
Treasury budget turned from a surplus of $214.3 billion in April to a deficit of $146.8 billion in May. Analysts had predicted a smaller shortage of $119.0 billion. (Event B on the chart.)

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