The Federal Reserve raised the policy rate by 25 basis points to the range of 4.5-4.75% as expected. The US Dollar came under heavy selling pressure but economists at Danske Bank still expect a lower EUR/USD as the base case remains for Fed to hike rates to 5% by May.
Powell sees a higher chance of a soft landing
“Fed hiked rates by 25 bps as widely expected. Powell saw probability of soft landing increasing, as inflation has eased without the economy slowing markedly. “
“The persistently tight labour and the turnaround in global manufacturing cycle leave Fed little room to turn more dovish. We still expect 2x25 bps hikes in the March and May meetings.”
“Markets reacted dovishly, with USD selling off and UST yields falling. We stick to our forecast of lower EUR/USD at 1.07 in 3M.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD flatlines below 1.1200 ahead of German inflation data, Powell
EUR/USD is oscillating below 1.1200 in the early European morning on Monday. The pair lacks a fresh directional impetus, awaiting the flash German CPI data and Fed Chair Powell's speech. More Chinese stimulus efforts keep risk sentiment in a sweeter spot amid Mideast risks.
GBP/USD holds gains below 1.3400 as USD struggles ahead of Powell
GBP/USD consolidates below 1.3400 in European trading on Monday. The pair eases after the downward revision to the UK Q2 GDP data. China's stimulus-led risk appetite, a subdued US Dollar and Fed-BoE policy divergence lend support to the pair ahead of Fed Chair Jerome Powell's speech.
Gold price remains confined in a range below all-time peak, Powell's speech awaited
Gold price remains on the defensive heading into the European session on Monday, albeit it lacks follow-through selling and hovers just below the all-time peak touched last week.
The week ahead: China stock rally, UK data revised lower and Payrolls
Stock markets gains are not broad based on Monday, and Japan’s Nikkei dropped more than 5%. This comes after some disappointment about the new prime minister, who has pledged to continue with the policies of his predecessor.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.