- The Federal Reserve is expected to maintain the policy rate without changes per second consecutive meeting.
- The review of economic projections (SEP) could offer key clues about policy perspectives.
- The US dollar could recover if the Fed minimizes concerns about growth.
The United States Federal Reserve (USA) will announce monetary policy decisions and publish the Summary of Economic Projections (SEP) reviewed, the so -called points graph, after the March policy meeting on Wednesday. Market participants widely anticipate that the US Central Bank will maintain the policy settings without changes per second consecutive meeting, after cutting the interest rate at 25 basic points (PBS) to the range of 4.25% -4.5% in December.
The CME Fedwatch tool shows that investors practically do not see possibilities of a rate cut in March, while they are valuing approximately 30% probability of a 25 PBs reduction in May. Therefore, the reviewed forecasts and the comments of the president of the FED, Jerome Powell, could influence the valuation of the US dollar (USD) more than the decision on the interest rate itself.
In December, the points chart showed that those responsible for the policy projected a total reduction of 50 PBS in the policy rate in 2025, while predicting an annual growth of the Gross Domestic Product (GDP) of 2.1% and an annual inflation of personal consumption spending (PCE) of 2.5% at the end of the year.
“The FOMC is expected to maintain its policy position without changes per second consecutive meeting,” TD Securities analysts said to anticipate the Fed event. “Based on the still stable sign QT for now, “they added.
Economic indicator
Economic projections of the FOMC
This report, published by the Federal Reserveincludes the projection of the Fed for inflation and economic growth in the next 2 years and, more importantly, a breakdown of the forecasts of the individual members of the FOMC interest rates.
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When will the Fed announce your decision about interest rates and how could it affect the EUR/USD?
The Federal Reserve of the United States has scheduled to announce its decision on interest rates and publish the monetary policy declaration with the SEP reviewed Wednesday at 18:00 GMT. This will be followed by the press conference of the president of the FED, Jerome Powell, which will begin at 18:30 GMT.
The disappointing macroeconomic data published in the US, combined with the fees ads of President Donald Trump, relived the fears of a possible recession in the US economy. According to the GDPnow model of the Bank of the Atlanta Federal Reserve, it is projected that the US economy is contracted at an annual rate of 2.4% in the first quarter.
In the event that the points chart shows a projection of 75 pb rate cuts in 2025, this could be seen as a moderate change in the warehouses and trigger another fall of the USD. On the contrary, a hard line review in the SEP, with officials forecasting a single 25 -PBs cut, could boost the currency.
If the projection of interest rates remains unchanged, investors will examine inflation and growth forecasts. A downward review of growth expectations could harm the USD, while an upward review of inflation forecasts, without a notable change in GDP estimates, could support USD in the short term.
Powell’s comments could also impact the USD performance. If you minimize concerns about an economic slowdown and put more emphasis on uncertainty that surrounds inflation perspectives, citing Trump administration rates, the USD is likely to exceed your rivals in the short term. On the contrary, if Powell recognizes signs of a worsening in growth prospects, the USD is likely to have difficulty finding demand.
Eren Sengezer, leading analyst of the European session at FXSTERET, provides a short -term technical perspective for the EUR/USD:
“The EUR/USD remains technically a short -term bullish, since it remains in the upper half of the two -month rise regression channel. In addition, the indicator of the relative force index (RSI) in the daily chart remains about 70, reaffirming the upward position.”
“Up, 1.1000 (upper limit of the ascending channel, round level) is aligned as a key resistance level before 1,1100 (static level, round level) and 1,1180 (static level of October 2024). Looking south, the first level of support could be found in 1,0770 (midpoint of the ascending channel) before 1,0720, where the simple mobile average (SMA) is located Under this last support it could attract technical sellers and open the door to an extended fall around 1,0645 (SMA of 20 days). “
FAQS Point Graph
The “Point Graph” is the popular name of interest rates of the Federal Open Market Committee (FOMC) of the US Federal Reserve (Fed), which executes the monetary policy. They are published in the Summary of Economic Projections, a report in which the members of the FOMC also announce their individual projections on economic growth, unemployment rate and inflation for the current year and the following. The document consists of a graphic in which the forecasts of types of interest are represented, with a point that represents the forecast of each member of the FOMC. The Federal Reserve also adds a table in which the forecast and median range of each indicator is summarized. This makes it easier for market participants to see how the political leaders expect to behave the US economy in the short, medium and long term.
The US Federal Reserve publishes the “Point Graph” once every two meetings, or in four of the eight annual scheduled meetings. The “Economic Projection Summary” report is published together with the monetary policy decision.
The “Point Graph” offers a complete vision of the expectations of the political leaders of the Federal Reserve (FED). Since it reflects the forecasts of each official on interest rates at the end of each year, it is considered a key indicator for the future. Observing the “Point Graph” and comparing the data with the current levels of interest rates, market participants can see where the political leaders expect the types and the general direction of monetary policy. Since the projections are published quarterly, the “points graph” is widely used as a guide to calculate the terminal type and the possible moment of a monetary policy.
The data that moves the market most in the “points graph” is the projection of the type of federal funds. Any change with respect to the above projections can influence the valuation of the US dollar (USD). In general, if the “points graph” shows that political leaders expect higher interest rates in the short term, this tends to be up to the USD. Similarly, if the projections point to lower types in the future, the USD is likely to weaken.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
