Ella 
In the Asian market on Thursday, the EUR/USD fell for the third consecutive day, falling to around 1.0640. The Federal Reserve chose to keep its current benchmark policy rate unchanged at 5.5% at its meeting on Wednesday, in line with market expectations.
The Federal Reserve is expected to raise interest rates again in 2023, adding to downward pressure on EUR/USD. In addition, the Fed revealed in its monetary policy statement that its expectations for inflation have increased slightly compared with its previous forecast.
While the monetary policy statement was largely in line with previous resolutions, the sudden strength in the U.S. dollar (USD) was largely attributed to Fed officials unexpectedly raising their interest rate forecasts for 2024, from 4.6% to 5.1%.
This adjustment played a crucial role in the rapid appreciation of the dollar against the euro. The U.S. dollar index (DXY) extended its gains and hit a six-month high near 105.50 at press time.
Rising U.S. Treasury yields helped the dollar gain. As of press time, the 10-year U.S. Treasury yield rose to 4.43%, the highest level since 2007.
Federal Reserve Chairman Jerome Powell reiterated the Fed’s commitment to achieving its long-term inflation target of 2% at a press conference after the interest rate decision.
Powell mentioned that the central bank is likely nearing the peak of its interest rate hike cycle, but emphasized that future policy decisions will be guided by economic data.
On the other hand, the euro came under pressure as the European Central Bank (ECB) raised its key interest rate to an unprecedented level of 4%, sending a clear signal that its 14-month policy tightening cycle may have reached its peak. .
In addition, the ECB’s downward revision of its inflation and GDP growth forecasts for the next few years, especially 2024 and 2025, also strengthens the view that no further interest rates will be raised in the near future.
EUR/USD traders are likely to focus on more U.S. data due on Thursday, including weekly jobless claims, the Philadelphia Fed manufacturing survey and changes in existing home sales. In the Eurozone, investors will focus on the preliminary consumer confidence index and a speech by European Central Bank President Christine Lagarde.
