EUR/USD: Euro Dives Below $1.07 as King Dollar Flexes Ahead of Interest Rate Decision

Jay Powell is expected to provide clues over incoming rate cuts. But recent economic data may complicate the timeline of events.

• The EURUSD pair fell 0.4% on Tuesday and remained under pressure Wednesday as markets anticipated today’s Federal Reserve interest rate decision. The exchange rate floated near $1.0650 in the early deals, down from a Tuesday high of $1.0735. Later today, the US central bank is expected to say it will maintain borrowing costs at unchanged levels between 5.25% and 5.50%.
• The expected rate hold is already priced in. What matters more is Fed boss Jay Powell’s guidance for any rate cuts in the coming months. Fed officials have previously indicated they’re looking to reduce rates by three quarters this year. But, they’ve also made it clear that incoming data may complicate things. And with that, today’s speech by Jay Powell will be a market mover.
• Across the forex board, the dollar maintained dominance, especially against the Japanese yen. After Japanese officials allegedly intervened in the currency market, the yen is once again getting demolished by a stronger greenback. Short-lived gains only lasted a day or two before the buck regained control and bumped the rate to levels near ¥158.00.