The FOMC meeting was the main topic for financial markets during the previous week. The Fed kept interest rates unchanged, as was widely expected. Still, after the meeting statement, Fed Chair Powell noted that Fed sticks with its projections of three rate cuts during the course of this year. The markets are now anticipating a first rate cut in June this year with 68% odds. On the other side are some big names on Wall Street who are sticking with a narrative of “higher for longer” and no rate cuts this year. At the current moment Fed is anticipating three more rate cuts during 2026 and two more in the future period, until the rate settles around 2.6%, which the Fed perceives as a “neutral” rate. FOMC members also raised expected growth rate for 2024 to 2.1% on an annual basis, from 1.4% previously projected. As for other indicators published during the week, Building permits preliminary for February in the US were 1.518M, a bit higher from estimated 1.495M.
Inflation in the Euro Zone final for February was standing at 2.6% y/y while core inflation was 3.1%, both unchanged from the previous release. The ZEW Economic Sentiment index for March in the Euro Zone was 33.5, a bit higher from previous 25.0. The same indicator for Germany was standing at 31.7, also better from forecasted 20.5. HCOB Manufacturing PMI flash for March for Germany was standing at 41.6, modestly lower from forecasted 43.1. The Ifo Business Climate for March in Germany was 87.8, modestly higher from market expectation at 86.
The Fed`s narrative supported the price of USD during the previous week. Although the currency pair started the week around 1.09, the volatility increased significantly after the FOMC meeting. The currency pair reached its highest weekly level at 1.094, after which it was strongly pushed to the downside, where the pair ended the week at level 1.0805. The RSI was moved below the level of 50, ending the week at the level of 42. This is indication that the market clearly is moving toward the oversold market side. Moving average of 50 days is currently very close to its MA200 counterpart, indicating a potential cross in the coming period.
Fed's latest narrative will hold for some time on the markets. In this sense, there is some probability that the USD might continue to gain in strength in the long run. For the week ahead, some relaxation might be expected, with the currency pair modestly moving toward the 1.09, in case that 1.08 support line is not breached during the week. In case that demand for USD moves the currency pair below the 1.08 support line, then the path toward the next support line at 1.067 will be open.
Important news to watch during the week ahead are:
Euro: GfK Consumer Confidence for April for Germany, Unemployment rate for Germany in March,
USD: Durable Goods Orders for February, CB Consumer Confidence for March, GDP Growth Rate final for Q4, Michigan Consumer Sentiment final for March, PCE Price Index for February, Fed Chair Powell speech on March 29.
Inflation in the Euro Zone final for February was standing at 2.6% y/y while core inflation was 3.1%, both unchanged from the previous release. The ZEW Economic Sentiment index for March in the Euro Zone was 33.5, a bit higher from previous 25.0. The same indicator for Germany was standing at 31.7, also better from forecasted 20.5. HCOB Manufacturing PMI flash for March for Germany was standing at 41.6, modestly lower from forecasted 43.1. The Ifo Business Climate for March in Germany was 87.8, modestly higher from market expectation at 86.
The Fed`s narrative supported the price of USD during the previous week. Although the currency pair started the week around 1.09, the volatility increased significantly after the FOMC meeting. The currency pair reached its highest weekly level at 1.094, after which it was strongly pushed to the downside, where the pair ended the week at level 1.0805. The RSI was moved below the level of 50, ending the week at the level of 42. This is indication that the market clearly is moving toward the oversold market side. Moving average of 50 days is currently very close to its MA200 counterpart, indicating a potential cross in the coming period.
Fed's latest narrative will hold for some time on the markets. In this sense, there is some probability that the USD might continue to gain in strength in the long run. For the week ahead, some relaxation might be expected, with the currency pair modestly moving toward the 1.09, in case that 1.08 support line is not breached during the week. In case that demand for USD moves the currency pair below the 1.08 support line, then the path toward the next support line at 1.067 will be open.
Important news to watch during the week ahead are:
Euro: GfK Consumer Confidence for April for Germany, Unemployment rate for Germany in March,
USD: Durable Goods Orders for February, CB Consumer Confidence for March, GDP Growth Rate final for Q4, Michigan Consumer Sentiment final for March, PCE Price Index for February, Fed Chair Powell speech on March 29.
