The EUR/USD currency pair experienced a slight dip on Wednesday, briefly falling below the 1.0400 level before rebounding back towards opening levels. The Federal Reserve chose to maintain interest rates during its latest meeting, a decision widely anticipated by market participants. With this news behind them, traders are now focused on upcoming economic data that could indicate future monetary policy direction.
Market analysts are preparing for Thursday’s release of the fourth-quarter Gross Domestic Product (GDP) growth figures. Expectations suggest a decline, with predictions pointing to an annualized growth rate of 2.6%, dipping from the previous rate of 3.1%. Inflation remains a focal point, with the GDP Price Index for the fourth quarter anticipated to rise to 2.5%, compared to a prior reading of 1.9%.
Attention will also shift to the December Core Personal Consumption Expenditures Price Index (PCEPI), due for release on Friday. Analysts forecast a month-over-month increase of 0.2% for December, an uptick from the previous month’s record of 0.1%. The annual PCEPI is expected to hold steady at 2.8%, remaining above the Federal Reserve’s target of 2%, which complicates the prospects for potential interest rate shifts.
In Wednesday’s Fed meeting, officials maintained their current rate stance, consistent with market expectations. The Fed’s data-dependent approach was highlighted, with officials closely observing the current economic climate and trade policies set forth by the administration. Indications suggest that the Fed is in no rush to modify its policy framework, particularly amid rising inflation concerns.
The EUR/USD pair has found itself in a technical stalemate near the 50-day Exponential Moving Average, situated around 1.0450. Both buying and selling pressures seem to lack conviction, leaving the pair capped below the 1.0500 mark, while further declines struggle to gain traction beneath 1.0400.
