Key Insights
- ECB raised rates by 50 bps and signaled that it would make another 50 bps rate hike in March.
- BoE also raised rates by 50 bps, but future rate hikes are expected to be smaller.
- USD/JPY gained additional downside momentum and settled below the 128.50 level.
U.S. Dollar
U.S. dollar rebounded from multi-month lows as traders continued to evaluate the Fed’s message.
Yesterday, Fed raised rates by 25 bps and delivered a rather hawkish message. At this point, the central bank does not plan to cut rates in 2023. However, the market believes that Fed will cut rates as inflation drops, which is bearish for the U.S. dollar.
EUR/USD
EUR/USD pulled back from multi-month highs after ECB raised rates by 50 bps and promised that it would hike them by another 50 bps in March.
It looks that traders believe that the March hike would be the final one. In addition, traders want to take some profits off the table after the strong rally.
GBP/USD
GBP/USD traders focused on BoE decision today. The Monetary Policy Committee voted 7-2 for another 50 bps rate hike. As a result, the main Bank rate reached the 4% level.
BoE intends to switch to smaller 25 bps rate hikes at the upcoming meetings. As two members voted to leave the rates unchanged, it remains to be seen whether BoE will stay hawkish, so it’s not surprising to see that GBP/USD found itself under pressure and settled below the 1.2300 level.
US Dollar Index Price Forecast
Every new US Dollar Index analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all US Dollar Index forecastsAUD/USD
USD/JPY
USD/JPY is currently trying to settle below the 128.50 level. Traders stay focused on the central bank policy. While the Fed has slowed the pace of rate hikes, some traders are ready to bet that BoJ will be forced to raise rates this year, which will be bullish for the Japanese yen.
For a look at all of today’s economic events, check out our economic calendar.
