The EUR/USD pair is closely observing the Federal Reserve’s discussions on interest rates.
The primary currency pair is gaining strength on Monday, with the current EUR/USD rate at 1.0904.
The Federal Reserve currently resembles parents on a long journey with young children, repeatedly responding to the question, “Are we there yet?” This question revolves around the anticipated interest rate change. Everyone is anticipating a shift, but the exact timing remains uncertain. Will it be in March? What if it happens later? These questions lack definitive answers at the moment.
Given the upcoming meeting on January 30-31, the Fed is expected to maintain the status quo due to insufficient time to gather new inflation data. The primary focus is now on the March meeting.
Roughly half of the Fed’s monetary policymakers believe there is room to decrease rates in the first half of 2024 if inflation declines more rapidly than anticipated. The other half takes a more conservative stance.
The outcome largely hinges on real-time data. The Fed requires solid evidence that the inflation trend is on track to return to the 2% target before committing to any adjustments in monetary policy.
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