US Dollar stronger on Fed keeping its projections for 2025

LONDON (March 20) The US Dollar Index (DXY), which tracks the performance of the US Dollar (USD) against six major currencies, rallies towards 104.00 on Thursday after the Federal Reserve (Fed) kept borrowing costs unchanged and projected two interest rate cuts for 2025. During Wednesday’s Fed meeting, Chairman Jerome Powell said that any tariff-driven bump in inflation will be “transitory.” However, he added later that it will be very challenging to say with confidence how much inflation stems from tariffs versus other factors. He also said recession odds have moved up, though are not high, Bloomberg reports. 

On the economic data front, the US jobless claims and the Philadelphia manufacturing data will be key. After Powell highlighted that the US economy might start to ease, traders will look for proof of that. Any data that comes in far below the benchmark could trigger some US Dollar weakness.

Daily digest market movers: Back to data-driven to determine interest rate cuts

• At 12:30 GMT, the most important data for this Thursday will be released:
  • US Initial Jobless Claims are expected to tick up to 224,000, coming from 220,000. The US Continuing Jobless Claims are expected to come in at 1,890 million against 1,870 million last week.
  • The Philadelphia Fed Manufacturing Survey for March is expected to fall to 8.5 from the previous 18.1.
• At 14:00 GMT, US Existing Home Sales month-on-month for February will be released. Expectations are for a contraction to 3.95 million compared to 4.08 million the previous month.
• Equities are struggling with European indices facing big profit-taking. The German Dax is down over 1%, while US futures are flat to marginally positive. 
• According to the CME Fedwatch Tool, the probability of interest rates remaining at the current range of 4.25%-4.50% in May’s meeting is at 80.5%. For June, the odds for borrowing costs being lower stand at 71.1%.
• The US 10-year yield trades around 4.22%, heading back to its five-month low of 4.10% printed on March 4.

FXStreet