The Federal Reserve is widely anticipated to keep interest rates unchanged, but Fed Chairman Powell’s remarks could provide important clues about the timing of a potential policy pivot. Market participants are expecting the Fed to wait until September to lower the interest rate, according to the CME FedWatch Tool.
The decision will be announced following the April 30 – May 1 policy meeting, with markets closely watching for any changes in the statement language and comments from Chairman Powell. Recent macroeconomic data releases have shown strong employment and growth figures, along with a lack of progress in disinflation, leading investors to shift their forecasts towards a policy pivot in the second half of the year.
Chairman Powell’s press conference following the announcement will be crucial in determining the impact on the US Dollar (USD) and other currencies. If Powell confirms that there won’t be a rate cut in June, the USD is likely to strengthen. However, if he acknowledges the negative impact of tight policy on economic activity and hints at a policy pivot in September, the USD could weaken.
Overall, analysts expect a hawkish hold from the Fed, with ongoing inflation and robust growth in the US supporting the Dollar. The technical outlook for EUR/USD suggests key resistance at 1.0800 and strong support at 1.0600.
The Federal Reserve’s decision and Chairman Powell’s remarks will be closely watched by investors and could have a significant impact on currency markets. Stay tuned for the latest updates on this developing story.
