On March 19, the Federal Open Market Committee (FOMC) released its latest interest rate decision in the early hours, keeping the federal funds rate target range unchanged at 3.5% to 3.75%, in line with market expectations. This marks the second consecutive meeting where rates have been held steady. The FOMC statement indicated that the decision was approved by an 11-1 vote. The committee made minimal changes to its economic outlook but slightly raised its full-year growth and inflation forecasts for 2026. Despite continued high uncertainty, officials reiterated that several rate cuts remain possible in the future. The closely-watched "dot plot" showed that most members expect one rate cut this year and another in 2027, though the exact timing remains unclear.
During a press conference on Wednesday, Fed Chair Powell pointed to stubborn U.S. inflation and heightened uncertainty—from Middle East tensions to tariff disruptions—slowing the pace of disinflation. Powell opened by stating that the U.S. economy is expanding, inflation remains slightly elevated, consumer spending is resilient, but housing sector activity is weak. He described the current policy stance as appropriate and "helpful in achieving our goals." Powell reiterated that labor demand has cooled significantly, although the unemployment rate has changed little since last summer, and past rate cuts should help stabilize the labor market. During the Q&A session, he added that while downside risks exist in the labor market, multiple employment indicators suggest a degree of stability. He emphasized the need to assess January and February reports together.
Key data to watch today include the UK February unemployment rate, UK January three-month average earnings including bonuses, U.S. initial jobless claims for the week ending March 14, the Philadelphia Fed Manufacturing Index for March, U.S. seasonally adjusted new home sales annualized total for January, and the final U.S. wholesale inventories month-on-month figure for January. Additionally, interest rate decisions from the Bank of Japan around midday, and the Bank of England and European Central Bank in the evening will be closely monitored.
**USD Index** The U.S. dollar index rebounded sharply yesterday, reclaiming the 100.00 level, with the spot rate currently trading around 100.10. Besides short-covering providing some support, the Fed's decision to hold rates steady and its hawkish signal, which further dampened expectations for rate cuts, were key factors driving the dollar index higher. Strong U.S. economic data released during the period also contributed to the gain. Resistance is seen near 100.50 today, with support around 99.50.
**EUR/USD** The euro declined yesterday, falling below the 1.1500 level, and is currently trading around 1.1480. The primary pressure came from the U.S. dollar index's recovery above 100.00, fueled by robust economic data and the Fed's hawkish tone. However, better-than-expected CPI data from the Eurozone limited the pair's losses. Data showed Eurozone February CPI rose 1.9% year-on-year, with core CPI up 2.4%, both meeting market expectations. Resistance is eyed near 1.1550 today, with support around 1.1400.
**GBP/USD** The British pound fell yesterday, dropping below the 1.3300 mark, and currently trades around 1.3290. The main downward pressure stemmed from the U.S. dollar's strength, supported by solid economic data and the Fed's hawkish signal, which further reduced expectations for Fed rate cuts. Nevertheless, delayed expectations for Bank of England rate cuts limited the pair's decline. Resistance is near 1.3400 today, with support around 1.3200.
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