EUR/USD jumps after Fed holds rates, but can't hold onto 1.0890
20.03.2024, 18:14

EUR/USD jumps after Fed holds rates, but can't hold onto 1.0890

  • EUR/USD bumped towards 1.0900 after Fed held steady.
  • Fed Dot Plot still sees 75 bps in 2024.
  • Fed expects rates to be held higher by end of 2026.

EUR/USD jumped on reaction to the Federal Reserve’s (Fed) latest rate call, which held rates at 5.5% as markets had broadly predicted. Investor expectations are pricing in additional easing in 2024, despite the Federal Open Market Committee seeing stronger growth through 2024 and 2025 than initially expected. The FOMC’s Dot Plot of interest rate expectations also saw a rise in the long tail end of the curve, with end-2026 rates now forecast to land somewhere around 3.1% versus the previous 2.9%.

The Fed is now projecting a higher long-term policy rate through December, ticking up to 2.6% from 2.5%, but markets are shrugging off the Fed’s growth expectations to push down the US Dollar (USD), sending the Euro (EUR) higher. EUR/USD crossed 1.0890 following the market’s pre-baked reaction to the Fed’s rate call. Investors will now buckle down for the short wait to Fed Chairman Jerome Powell’s press conference slated for the bottom of the hour at 18:30 GMT.

Read more: Fed leaves interest rate unchanged at 5.25%-5.5% as forecast

EUR/USD 5-minute chart

 

 

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