During today's Asian trading, the US dollar consolidated against major currencies, remaining near a 5-month low, while market participants are cautious ahead of tomorrow's announcement of the results of the Fed meeting.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.03% to 103.44. Since the beginning of the month, the index has fallen 3.8% amid concerns that Donald Trump's aggressive tariff policy could trigger a broader economic slowdown. As for the Fed's March meeting, economic activity in the United States has slowed since the last rate decision (January 29), the labor market continued to “cool down”, and consumer spending was weak at the beginning of the year. Despite this, the Fed is expected to leave rates unchanged again at tomorrow's meeting. The cooling in the labor market has been gradual, and inflation, although remaining above the Fed's 2% target, has declined. The core consumer price index dropped in February to its lowest annual level since 2021. In addition, Fed Chairman Powell noted that the Central Bank “does not need to rush” to adjust its policy position. An updated summary of economic forecasts will also be presented at the end of the March meeting. The average forecast is expected to assume a 50 basis point rate cut by the end of this year, although experts note that the risks will be more shifted towards policy easing by 75 basis points rather than 25 basis points.
The euro traded steadily against the US dollar, remaining near its highest level since October 11, 2024, as investors prepare for a vote on Germany's massive stimulus proposal, which could support Europe's largest economy and boost growth across the region, despite trade tensions with its largest partner, the United States. The Conservatives and the Social Democrats (SPD) want to create a 500 billion euro fund for infrastructure and to ease constitutionally enshrined borrowing rules to allow higher spending on security. The plans, if implemented, would upend decades of fiscal conservatism in Germany.