EUR/USD weakens to approximately 1.1490 during the early European session on Tuesday. The Federal Reserve is expected to maintain the current interest rates during its upcoming meeting in March on Wednesday. The ECB is anticipated to maintain its deposit rate at the current level on Thursday. The EUR/USD pair is currently positioned in negative territory, trading around 1.1490 during the early European session on Tuesday. The US Dollar strengthens against the Euro as surging oil prices, driven by the conflict involving the US and Israel in Iran, have heightened concerns about inflation, leading to a significant adjustment in expectations regarding Federal Reserve rate policies.
This week, attention will be focused on the interest rate decisions of the Federal Reserve and the European Central Bank. The US central bank is anticipated to maintain its benchmark interest rate within the existing range of 3.50% to 3.75% at the conclusion of its two-day meeting on Wednesday. Since the onset of the Iran war, increasing oil prices have prompted analysts to revise their expectations regarding rate cuts. Goldman Sachs economists adjusted their expectations for Fed rate reductions in June, citing “a higher inflation path.” They forecasted reductions in September and December, in contrast to the earlier projections of June and September.
The European Central Bank is expected to maintain its benchmark deposit rate at 2.0% during the upcoming meeting in March on Thursday. Nonetheless, ECB Governing Council member Peter Kazimir indicated that policymakers might consider a rate hike earlier than anticipated.
Interest rate futures are fully incorporating a rate hike by the end of July, with approximately a 55% probability of an additional increase by the end of December. However, economists surveyed by Reuters from March 9 to 13 maintained their longstanding perspective on stable rates.