⚖️💶 EUR/USD Detached From Rate Differentials: Cable FX Macro

• The euro found bids above 1.07 on a relatively dovish Fed Chair Powell, the Fed held rates in November and swaps priced in a rate cut as soon as June (last pricing has pushed Fed rate cut to July)

• Risk assets might have found the tone change from Powell supportive, the S&P 500 index recorded its best week since November 2022. However, not much has changed for the euro from a macroeconomic perspective

• A sharp rise in yield differentials did not see EUR/USD follow through, while it retraced from the October readings below 1.05. Despite the bullish trade, the 10y Tsy-Bund spread breached above 200bps, this isn't euro supportive as this level of rate differentials has seen EUR/USD closer to parity