25 March 2024, EUR/USD
EURUSD:
Last week, the Federal Open Market Committee (FOMC) kept rates unchanged at 5.25-5.50% for the fifth consecutive meeting. FOMC Chairman Powell said that recent elevated CPI inflation data did not change the view that inflation is trending lower, adding that the central bank would be willing to cut rates if labor market conditions unexpectedly deteriorate. The FOMC maintained its forecast for the median rate through 2024 at 4.625% and signaled three quarter-point rate cuts this year. Comments from Fed officials in favor of a soft policy will weigh on the US dollar and limit EUR/USD's decline.
European Central Bank (ECB) Governing Council member Edward Scicluna said that an ECB interest rate cut as early as April may be warranted and should not be ruled out. Bundesbank President Joachim Nagel said on Friday that the ECB may be in a position to cut interest rates before the summer, possibly in June, as inflation returns to the 2% target.
Financial markets expect an 89 basis point (bps) rate cut or at least three but possibly four 25 bps steps, with the first of these occurring in June or July. Growing speculation that the ECB will become the second major central bank to cut rates after the Swiss National Bank (SNB) unexpectedly cut rates last week is weighing on the Euro (EUR) against the US Dollar.
Trading recommendation: Trade with buy orders when the price reaches 1.0840. Sell at the price level of 1.0800.
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