The Fed’s decision to raise the key interest rate by 25 basis points did not surprise traders. Thus, unlike the following press conference, it had zero effect on the market.
The speech provided by the Fed Chair spurred a slump in the US dollar. It seems that the US regulator is in a panic and does not know what to do. Such an impression was caused by a transcript of Jerome Powell's comments.
Earlier, the Federal Reserve talked about external factors and obstacles posed by Russia and sometimes by China. Now, the regulator has forgotten about problems with these countries as the US has faced a grave banking crisis. Although Jerome Powell attempted to calm down investors, they did not believe him.
The regulator continues to repeat that it is necessary to reach the targeted inflation level and keep high employment. Nevertheless, such a sharp change in its rhetoric makes it clear that the regulator is a bit puzzled. It seems that the situation in the banking sector came as a surprise. It is evident that such an idea is frightening people. What is more, traders see enough reasons for a possible cut in the key rate.
In addition to the FOMC meeting, traders’ attention was also attracted by the UK inflation data. According to the report, inflation in the United Kingdom accelerated instead of slackening.
That is why it is more difficult to predict the results of the BoE’s meeting that is scheduled for today. It is highly possible that the Bank of England will raise the key rate by 25 basis points. However, the following comments may contain hints about further monetary policy tightening. Thus, investors may conclude that by the end of the year, the benchmark rate in the UK will exceed the one in the US. This, in turn, may bump up the pound sterling and the euro.

Ahead of the publication of the BoE’s meeting results, we see that the euro/dollar pair broke the resistance level of 1.0800 amid an inertial movement. As a result, the volume of long positions increased, thus pointing to the euro’s recovery after a slump in February. Since the euro is overbought in the intraday period, it may show a bounce. In the event of this, the market situation may change. However, speculators may ignore the technical signal. In this case, the price is expected to climb to the high of the mid-term uptrend located at 1.1033.

Meanwhile, the pound sterling jumped to 1.2300 amid the massive sell-off of the US dollar. This confirms that the British pound is recovering after a considerable decline recorded in February.
If the price consolidates above 1.2300, it is likely to go on rising, which will allow it to recoup all the losses. However, traders should keep in mind that the pound sterling has every chance to become extremely overbought.



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00:00 INTRO
00:15 Jerome Powell
00:33 The Federal Reserve
01:01 FED’S KEY INTEREST RATE
01:35 Inflation in the United Kingdom
01:49 BOE’S KEY INTEREST RATE
02:26 EUR/USD
03:09 GBP/USD