🎁 💸 Warren Buffett's Top Picks Are Up +49.1%. Copy Them to Your Watchlist – For FreeCopy Portfolio

EUR/USD Swings Wildly Post Key Central Bank Decisions: Downside Bias Taking Hold

Published 22/03/2024, 11:51
  • Fed remains on course for 3 interest rate cuts this year.
  • Meanwhile, SNB has surprised the market with an interest rate cut.
  • And, the Bank of England won't rush a pivot.
  • In 2024, invest like the big funds from the comfort of your home with our AI-powered ProPicks stock selection tool. Learn more here>>
  • Key Central Banks' decisions have dictated the financial markets this week. The Bank of Japan took a historic step by raising interest rates by a symbolic 0.1%, the first increase since 2007.

    However, the market expected a more significant move, causing the Japanese yen to weaken further.

    Meanwhile, the Federal Reserve and the Bank of England left rates unchanged as anticipated. Surprisingly, the Swiss National Bank decided to cut interest rates, leading to the Swiss franc's weakening.

    EUR/USD on a Wild Ride

    The Fed's meeting was closely watched, but no pivot date was announced, leaving the EUR/USD pair in uncertainty.

    Although rates were expected to remain unchanged, the overall sentiment was dovish due to the Fed's announcement of a slower reduction in its balance sheet. While there's no official confirmation, the market speculates a pivot in June.

    As a result, the currency pair experienced volatility, rebounding strongly after the meeting but retracing during the following session. Ultimately, the rate remained almost unchanged from Wednesday, giving a neutral impression.

    If selling pressure persists, the next target is the support level around 1.08. Breaking this level could lead to a move towards the demand zone near 1.07. EUR/USD 5-Hour Price Chart

    Why Did the SNB Cut Interest Rates?

    The biggest surprise this week was the Swiss National Bank's decision to cut interest rates by 25 bps, with the market consensus anticipating no move.

    This is not the first time the SNB has surprised the market. These types of unsignaled decisions are not uncommon with the Swiss monetary policy.

    The main argument is inflation remaining on target and its projection, which assumes stabilization in the coming years.

    Swiss National Bank Rate Decision

    In the coming months, inflation dynamics will invariably remain key, and in a situation where we see continued disinflation, it is not unlikely that we will see another previously unsignaled reduction.

    Bank of England to Pivot Soon?

    Yesterday's meeting of the Bank of England did not bring much change in terms of current monetary policy, as confirmed primarily by the results of the vote: 8 members in favor of leaving current levels and 1 in favor of cuts. Bank of England Decision

    "Monetary policy will need to remain restrictive for a sufficiently long time to bring inflation back to the 2 percent target on a sustainable basis in the medium term,"

    This statement clearly reflects the board members' stance on current policy. It suggests that the BOE is unlikely to take proactive measures, and any rate cuts may only occur after similar actions by the ECB and the Fed.


    Take your investing game to the next level in 2024 with ProPicks

    Institutions and billionaire investors worldwide are already well ahead of the game when it comes to AI-powered investing, extensively using, customizing, and developing it to bulk up their returns and minimize losses.

    Now, InvestingPro users can do just the same from the comfort of their own homes with our new flagship AI-powered stock-picking tool: ProPicks.

    With our six strategies, including the flagship "Tech Titans," which outperformed the market by a lofty 1,183% over the last decade, investors have the best selection of stocks in the market at the tip of their fingers every month.

    Subscribe here and never miss a bull market again!

    For readers of this article, now with the code: INWESTUJPRO1 as much as 10% discount on annual and two-year InvestingPro subscriptions.

    Subscribe Today!

    Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple points of view and is highly risky and therefore, any investment decision and the associated risk remains with the investor.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.