Fed Decision Helps Dollar to Come Back
After yesterday’s dip, the US dollar (USD) is back and going strong against the Euro.
The Federal Reserve announced, as most people expected, that there would be no interest rate cuts. They opted for no action and a statement that was neutral and not committed to change of any kind. So, we will not be getting rate cuts for March, and that means fear over the Fed’s statement hurting the dollar are not over.
This has allowed the US dollar to rebound, and it has gained ground against the Euro. The price had dropped to 0.922 on the USD/EURO pairing. That was on Wednesday before the Fed issued its statement. Sentiments were fearful that the Fed’s statement would not go the way many had expected, and the dollar dipped in response.
After the neutral statement and the declaration of no rate cuts, the dollar started to rise again. Now, it is sitting at 0.9228 and rising. Analysts expect it to continue to do well in the coming days as fears over rate cuts disappear for now.
More rate hikes could come down the line, and the Federal Reserve did mention that in its statement. However, it is the same line that economists expect to hear from the Fed every time one of these reports is issued.
USD’s Recent Performance
The dollar has been doing well this year, helped along by a recovering economy. The US is looking better right now than some major European countries, particularly in the jobs market, GDP, and US Dollar Index. All of these areas are seeing improvement lately, which has helped give the US dollar a small boost. Cooling inflation is giving the dollar a small boost too.
None of these are major indicators, since they are only mildly positive, but they bode well for the near future of the dollar and its pairing against the Euro, loonie, and yuan. In all of these pairings, the US dollar is performing mildly well. It is struggling up against the Japanese yen, though, not managing to recover since its drop before the Fed’s conference on Wednesday.
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