EURUSD Reacts to US Economic Developments and Central Bank Decisions

EURUSD reacts to US economic developments and central bank decisions. The pair has recently experienced a decline, primarily influenced by the rise in US Treasury yields. It also comes with the anticipation surrounding the Federal Open Market Committee (FOMC) meeting. Investors have shifted their focus to the upcoming FOMC meeting and the potential changes in interest rate projections, leading to a dip in the euro.

While Eurozone inflation figures have met expectations, the movements of EURUSD have been limited due to the market’s anticipation of policy direction. Mario Centeno, a representative of the ECB, has emphasized the importance of price stability. He also suggested that adjusting interest rates could help prevent a recession in the Eurozone.

Big Banks Expectation

At the beginning of the week, the euro weakened against the US dollar, with the EURUSD trading at the 1.0870 key level, marking a 0.14% decrease. This decline can be attributed, in part, to predictions that the Fed’s ‘dot plots’ might indicate a shift in monetary policy projections.

This week, we can expect significant monetary policy decisions from the three major central banks. The Bank of Japan is expected to raise rates slightly, potentially ending negative interest rates. Meanwhile, the Fed is projected to maintain its current policy, although there is speculation about possible adjustments to interest rate forecasts.

 Eurozone inflation data for February showed a slight decrease, aligning with forecasts. However, this had little impact on the EUR/USD as the market awaited the Fed’s decision. ECB policymaker Centeno noted that financial stability is necessary for price stability and hinted that lowering the main rate might prevent a recession in the Eurozone.

Note: Forexschoolonline.com is not a financial advisor. Do your research before investing your funds in any financial asset or presented product or event. We are not responsible for your investing results