The primary currency pair is holding higher on Thursday. The current EURUSD exchange rate stands at 1.0905.
Investors are reacting against the US dollar after extracting valuable insights from the Federal Reserve's aggressive comments.
The Fed's meeting ended with a neutral outcome. The interest rate was kept at 5.50% per annum, and the tone of statements was positive overall. However, it should be acknowledged that the Fed took some sharp turns: initially expressing readiness to maintain a tight monetary policy and later providing a high inflation assessment.
According to the Fed's estimates, the US economy is slowing down, but the risks of a recession next year are less than 50%. An interest rate reduction in 2024 is seen as a measure to mitigate recession risks in the US. At the same time, the inflation issue will recede to the background. According to the CME FedWatch monitor, the market expects an 80% probability of a rate cut in March.
On the whole, the situation turned out complicated and emotionally charged. But the market heard what it wanted: the interest rate would fall – and this worked against the USD.
On Thursday, market attention will shift to the European Central Bank meeting. With no intrigue regarding the interest rate, it is worthwhile to focus on the regulator's comments.