Amid FOMC’s Decision To Maintain a Dovish Stance, the Euro Drifts

Amid FOMC’s Decision To Maintain a Dovish Stance, the Euro Drifts

The euro exchange rate on Thursday remained practically unchanged. The EUR/USD pair is currently trading at 1.1880, up 0.07% over the day.
At the beginning of the week, the euro was very hot: the EUR/USD pair rose by almost 1.0% and for the first time in two weeks climbed above the 1.19 level. However, the pair went into pause mode, as it fluctuates slightly below the 1.19 level.

The introduction of the vaccine in the EU has slowed dramatically, and the daily headlines that the AstraZeneca vaccine may be linked to blood clots only exacerbate the situation. The IMF lowered its growth forecast for the eurozone due to sluggish development. Nonetheless, the IMF expects the euro area to grow by 4.4% in 2021 and 3.8% in 2022.

The minutes of the FOMC meeting did not shake the currency markets as the Fed made it clear to the market that it remains in “pigeon mode”. Members believe that the risks to the economy remain balanced, but at the same time, economic activity remains well below the long-term targets of the FOMC. The minutes say the labor market has not recovered to pre-coronavirus levels, but on the positive side, the recent rise in Treasury yields indicates an improvement in economic conditions.
Dollar Extends Losses
The dollar fell against all of its major rivals except the pound. Satisfied comments from the head of the Federal Reserve System Powell, low government bond yields, and weak US employment data put pressure on the US currency.

EUR/USD rallied to 1.1927, maintaining most of its gains towards the end of the American session. Robert Holzmann, the head of the Austrian central bank, said the European Central Bank could start cutting back on its bond purchases in the summer, lending support to the common currency.

European and US stocks posted moderate gains during the day, which provided some support for commodity-pegged currencies. The Australian dollar found further support in the rally in gold prices as the spot climbed to its highest level since March 1, ending the day at around $ 1,755.00 an ounce.

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Author : Azeez Mustapha

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Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.