Forexlive Americas FX news wrap 19 Mar: Fed keeps rates unchanged. See two cuts in 2025

• US stock markets cheer on Fed day
• How Federal Reserve pricing for this year changed since the FOMC decision
• What did the Fed Chair say today organized by topics?
• Powell Q&A: A ‘good part’ of higher inflation forecasts is due to tariffs
• Powell opening statement: Recent indications point to a moderation in consumer spending
• A look at the changes in the FOMC statements from January to March
• The March 2025 dot plot and estimates for GDP, Unemployment and PCE inflation
• The full statement from the March 2025 FOMC rate decision
• Federal Reserve rate decision: Rates held unchanged, as expected
• Zelensky said he had a ‘positive, substantial’ call with Trump
• Trump gave Iran a two-month deadline to reach a nuclear deal – report
• What to watch: Initial jobless claims, capex and card spending data
• European indices close mostly higher
• Trump after call with Zelensky: We are very much on track
• EIA weekly crude oil inventories +1745K vs +512K expected
• Bank of America CEO says consumers are continuing to spend despite pessimism
• Hassett: Fed likely a little tighter than equilibrium right now
• Canada Teranet February house price index -0.1% m/m vs -0.1% prior
• BOJ keeps rates unchanged. Fed is next. What are the technicals telling traders?
• ForexLive European FX news wrap: Dollar firmer with eyes on the Fed
• US MBA mortgage applications w.e. 14 March -6.2% vs +11.2% prior

The Fed kept rates unchanged as per expectations. The dot plot sees the same progression on rates with 2 cuts expected in 2025. Inflation is likely to increase from the prior reading with PCE up to 2.7% from 2.5% in December while the core is expected to rise to 2.8% from 2.5%. GDP is expected to slow to 1.7% from 2.1% previously, while the unemployment rate is expected to rise to 4.4% vs 4.3% in December and up from 4.1% currently.

In his Q&A session, the Fed Chair Jerome Powell said that the Fed remains patient on rate decisions, maintaining its restrictive stance while assessing economic conditions. Policymakers see no urgency to adjust rates, as the cost of waiting for further clarity is low. While policy can shift as needed, there is uncertainty about forecasts, making it prudent to hold or cut rather than tighten unless inflation proves persistent.

Powell commented that Inflation remains in the 2% range, but tariffs have contributed to a recent pickup in goods inflation. The Fed is closely monitoring whether these increases are temporary or a more persistent issue, though it is challenging to isolate tariff-driven inflation. While housing services inflation is easing, tariff-related price pressures may delay further progress toward price stability. Policymakers expect inflation to be transitory, but this hinges on inflation expectations remaining well-anchored. The long-term outlook remains stable, though uncertainty around tariff impacts persists, making it too early to determine if policy adjustments will be needed.

Powell characterized the labor market as balanced, with low hiring and layoff rates. While any significant rise in layoffs could quickly impact unemployment, current levels are not a concern. The Fed sees no immediate labor market instability, keeping employment conditions stable for now.

Ovearll, despite a decline in sentiment, the economy remains fundamentally healthy. Public frustration over rising prices is understandable, and policy shifts under the new administration have contributed to uncertainty. Forecasts signal weaker growth and higher inflation, but these factors largely offset each other, making policy adjustments complex. The chair emphasized that the Fed remains focused on hard data rather than short-term sentiment shifts and is closely monitoring financial conditions for any persistent changes. While recession risks have increased slightly, they remain low at this stage.

The USD moved lower after the decision, retracing some/most the gains from before the decision. Overall for the day, however, the USD remains mostly higher on the day (it was still off session highs). The only currency the greenback did decline against was the JPY with a fall of -0.38% (it was up about the same amount at session highs):

• EUR +0.37%
• JPY -0.38%
• GBP Unchanged
• CHF +0.11%
• CAD +0.15%
• AUD +0.14%
• NZD +0.09%

Technically,

• EURUSD: The EURUSD traded lower into the decision and fell below the 100/200 hour MAs at 1.0896 and 1.0885 respectively before rebounding above those MA into the close. The current price is at 1.0900 after trading as low as 1.0859. The MAs will be the short term barometer in the new trading day.
• USDJPY: The USDJPY traded as high as 150.13 today and into a swing area between 150.11 to 150.28. However, the Fed Chair comments sent the pair lower and below the 100 hour MA at 149.03. The pair did find support in a swing area between 148.56 to 148.72 and above the 200 hour MA at 148.37. In the new day, the 100 hour MA at 149.03 will be resistance, and the 200 hour MA at 148.37 (and moving higher) will be the resistance.
• GBPUSD: The GBPUSD toyed with breaking below the 100 hour MA (currently at 1.2964) today but could not muster any momentum on the dips below the MA level. The price is trading just above natural resistance at 1.3000 going into the close. Ultimately, the pair will need to break below the 100 hour MA and the 200 hour MA at 1.2946 and moving higher, for the sellers to take back some control. Absent that, and the buyers are still in play
• USDCAD: THe USDCAD moved higher and briefly broke above the 200 bar MA on the 4-hour chart at 1.4332 and the 50% of the range since the February low at 1.4345, but rotated lower and trades below those levels at 1.4325. If the buyers are to take control, they need to get and stay above those technical levels. On the downside, the 1.4268 to 1.4278 swing area (low of Red Box), stalled the fall. A break below that area, increases the bearish bias.
• NZDUSD: The NZDUSD moved lower into the decision (higher USD), but stalled the fall at the 100-hour MA (currently at 0.5776). It will take a move below that MA to give the sellers more control in the new trading day. Apart from that, the buyers (dollar sellers) are more in control).

• AUDUSD: The AUDUSD fell below the 100 day MA at 0.6349, the 100 hour MA (currently at 0.6339) but stalled the fall just ahead of the 200 hour MA at 0.6318. The price has bounced higher and trades back above the 100 day MA at 0.6349. That will be a close barometer in the new trading day.

Looking at the US debt market, yields are lower:

• 2-year yield 3.974%, -6.8 basis points
• 5-year yield 4.020%, -4.9 basis points
• 10 year yield 4.243%, -3.6 basis points
• 30 year yield 4.553%, -2.5 basis points

In the US stock market, the major indices are closing higher but off highest levels

• Dow industrial average +383.32 points or 0.92% that 41964.63
• S&P index up 60.63 points or 1.08% at 5675.29.
• NASDAQ index up 246.67 point or 1.41% at 17750.79.
• Russell 2000 up 32.14 points or 1.57% at 2082.07.

European shares close mostly higher:

• German DAX -0.40%
• France’s CAC +0.70%
• UK’s FTSE 100 was 0.02%
• Spain’s Ibex +0.40%
• Italy’s FTSE MIB +0.45%

Looking at other markets:

• Crude oil up $0.26 or 0.39% at $67.01
• Gold up $13.24 or 0.44% at $3047.48. The new record high at $3052.10 was reached today.
• Bitcoin is trading up $2621 and $85,336.

This article was written by Greg Michalowski at www.forexlive.com.