EUR/USD, GBP/USD, USD/CAD, USD/JPY – U.S. Dollar Remains Under Pressure Ahead Of Fed Decision

Key Insights

• U.S. Dollar Index settled near the 103 level. 
• GBP/USD tested resistance at 1.2300 after the higher-than-expected inflation reports. 
• USD/JPY declined towards 132.50 as Treasury yields pulled back from session highs. 

U.S. Dollar

U.S. Dollar Index declined towards the 103 level ahead of the Fed Interest Rate Decision. The FedWatch Tool indicates that there is a 87.8% probability of a 25 bps rate hike. Currently, traders expect that federal funds rate will peak at 500 – 525 bps and decline to 425 – 450 bps by the end of the year.

Today, Fed will also release its Economic Projections and Interest Rate Projection, which will have a significant impact on market dynamics. Traders should be prepared for fast moves after the release of the decision. In addition, markets will certainly react to Powell’s comments during the press conference.

EUR/USD

EUR/USD moved towards the 1.0800 level after ECB President Christine Lagarde’s comments. Lagarde did not reveal anything shocking, so EUR/USD continued to move higher ahead of Fed decision. Most likely, EUR/USD will continue to face significant resistance near 1.0800 ahead of the Fed decision.

GBP/USD

GBP/USD settled near 1.2240 after an unsuccessful attempt to climb above the 1.2300 level. Today, traders focused on the inflation data from the UK. Inflation Rate increased from 10.1% in January to 10.4% in February, compared to analyst consensus of 9.9%. Core Inflation Rate grew from 5.8% to 6.2%. The surprising reports provided support to the British pound, although traders were not ready for big moves ahead of the Fed decision.

USD/CAD

USD/CAD settled near the 1.3700 level while oil markets continued to rebound. Other commodity-related currencies have managed to gain some upside momentum in today’s trading session. AUD/USD tested the 0.6700 level, while NZD/USD climbed above 0.6200.

USD/JPY

USD/JPY tested the 133 level but lost momentum and pulled back. Treasury yields pulled back from session highs, which was bearish for USD/JPY.

For a look at all of today’s economic events, check out our economic calendar.