FXStreet (Córdoba) - Eric Theoret, CFA, CMT FX Strategist at Scotiabank notes that risk is elevated ahead of the Fed statement and vulnerability lies with the Fed tone and potential for moderation in the hawkish bias. Key Quotes “EUR is quiet, rising modestly as it completes a full retracement of Friday’s sizeable decline with a rise toward last Thursday’s pre-ECB levels near 1.0900." "Risk is elevated as we head into the 2pm EST Fed statement release and vulnerability lies with the Fed tone and potential for moderation in the hawkish bias. Risk is exacerbated by the potential for positioning-driven gains in EUR as we consider the $18.7bn CFTC net short position built on expectations of Fed-ECB divergence.” “Any moderation in expectations for Fed normalization would likely drive considerable near-term EUR strength”. “EUR is trading in line with levels implied by the 2Y Germany-U.S. spread and below those implied by the 10Y spread. Risk reversals hint to demand for near-term protection against upside risk in EUR. Longer term measures suggest a continued moderation in demand for downside protection.” For more information, read our latest forex news.