EUR/USD declined on Wednesday by more than 0.43% following the Federal Reserve’s announcement of a “hawkish cut.” Fed Chair Jerome Powell remarked that “rate cut in December is far from foregone conclusion.” Currently, the pair is trading close to weekly lows of 1.1601, with market participants monitoring the monthly lows at 1.1542.
The EUR/USD pair has declined by more than 0.40% following Powell’s statement that a rate cut in December is not assured. Powell underscores the internal divisions within the Fed, indicating that policy might be approaching neutrality, which could moderate dovish expectations. The probability of an additional rate cut has decreased to 62% from 85% prior to the decision, according to data.
> The Euro has reached a five-day low, trading close to 1.1577, following indications from the Fed that a policy pause could be imminent : Following the Fed’s decision, Jerome Powell remarked, “A further reduction in the policy rate at the December meeting is not a foregone conclusion, far from it.” He noted that there are various perspectives within the Federal Open Market Committee, but the majority are concentrated on the forthcoming December meeting. Powell noted that “there’s a sense” among some officials regarding a desire to step back, indicating that the fed funds rate is at neutral or close to neutral, as per reports. Following his remarks, the EUR/USD experienced a decline, breaking below the 1.1600 level, dropping to a five-day low of 1.1577, before recovering to 1.1500. According to data, the probability of a Federal Reserve rate cut in December stands at 62%, a decrease from approximately 85% prior to the Fed’s decision. The US Dollar Index, which monitors the performance of the dollar against six currencies, has increased by 0.63%, reaching 99.28. Market participants are closely monitoring the European Central Bank’s monetary policy decision on Thursday, where President Christine Lagarde and her team are anticipated to maintain the current interest rates.
Latest FX Rate Trends : EUR/USD declines as Fed adopts a hawkish stance
- The Federal Reserve lowered rates by 25 basis points, aligning with market expectations, to a range of 3.75%-4%. The decision was not unanimous, with two dissenters: Governor Stephen Miran advocating for a 50-bps reduction, while Jeffrey Schmid of the Kansas City Fed preferred to maintain the current rates.
- Concerning the balance sheet reduction, “The Committee decided to conclude the reduction of its aggregate securities holdings on December 1.”
- Market participants are closely monitoring the potential for a trade agreement between the United States and China, particularly in light of the upcoming meeting between President Trump and President Xi Jinping in South Korea this Thursday.
- The ongoing debate in France centers around the budget, particularly highlighting the potential implementation of a wealth tax. France’s Socialist Party has indicated its readiness to destabilize the government by the end of the week if the upcoming budget does not incorporate a significant tax hike on the affluent.