Ella 
In early trading in Asia on Wednesday, EUR/USD was flat above the mid-range of 1.0800. Meanwhile, the U.S. dollar index is trading near three-week highs of 103.80, consolidating gains. Traders are awaiting the Federal Reserve’s monetary policy meeting later in the day and will get more clues from Fed Chairman Jerome Powell’s press conference and economic forecasts. As of press time, EUR/USD was trading at 1.0865, unchanged throughout the day.
The Fed is widely expected to keep its key federal funds rate unchanged at a range of 5.25% to 5.5% and maintain its macroeconomic forecasts at its March meeting on Wednesday. Analysts expect Federal Reserve Chairman Jerome Powell to reiterate that the Fed wants to see inflation data to prove that the Fed is effective in combating inflation before cutting interest rates. Financial markets expect the Fed to cut interest rates by 25 basis points (bps) in July, taking a total of 100 bps this year. The U.S. dollar has attracted some buying over the past few sessions as expectations for a rate cut have eased.
In the Eurozone, the ZEW Economic Sentiment Index for the Eurozone rose to 33.5 in March from the previous value of 25.0, which was higher than the expected value of 25.4. At the same time, Germany’s ZEW economic sentiment index rose to 31.7 in March from the previous value of 19.9. The reports point to a more optimistic outlook for the euro zone and Germany. However, the survey failed to boost the euro (EUR) as traders preferred to wait and see ahead of the Fed’s interest rate decision.
ECB President Christine Lagarde is due to speak on Wednesday, and the European Commission is to publish preliminary readings of its consumer confidence index for March. Later on Wednesday, the Federal Reserve’s monetary policy meeting will take center stage. After the meeting, focus will turn to Powell’s press conference, which is likely to provide information on the central bank’s policy outlook.
