EURUSD:
The EUR/USD currency pair reached a new high for September following the Federal Reserve’s (the Fed) unexpected decision to cut interest rates by 50 basis points on Wednesday. This development has boosted risk appetite and prompted traders to adopt a more bullish stance. This is the first occasion on which the Federal Reserve has reduced interest rates for a period of four years.
The Federal Open Market Committee’s (FOMC) dot plot of aggregate economic forecasts was also revised downwards from the Fed’s previous rate forecast. The median expectation of the Federal Reserve is that the federal funds rate will be 4.4% by the end of 2024 and 3.4% by the end of 2025. This is a reduction from the previous forecasts of 5.1% and 4.1%, respectively.
A closer examination of the Fed’s notes reveals that the central bank now anticipates U.S. gross domestic product (GDP) growth of 2.0% through 2024, a downward revision from the previous 2.1% figure released in June. Additionally, Fed officials anticipate that the US unemployment rate will reach 4.4% by the end of 2024.
As the Fed finally met the expectations of the market, which had been demanding a rate cut since the beginning of the year, global markets turned their attention to the press conference of Fed Chairman Jerome Powell.
Trade recommendation: Trading predominantly Buy orders from the current price level.
Origin: FreshForex
