The Yen and European Currencies Strengthen after the Fed Meeting

Yesterday's meeting of the US Federal Reserve disappointed dollar buyers. The rate remained at the same level as expected (5.25–5.50%). However, according to the updated FOMC forecast, it will be reduced three times this year by 0.25%, in contrast to four in the December forecast. The 2025 forecast also shows fewer expectations for rate cuts, just three. Naturally, investors' disappointment with this turn of events resulted in sales of the American currency in almost all directions. Thus, the US dollar/yen currency pair rebounded from recent highs at 151.80 and is currently trading below 151.00, the pound/US dollar retested 1.2800, and euro/US dollar buyers managed to strengthen the pair above 1.0900.

GBP/USD

Weak data on inflation and producer price index in the UK for February, published yesterday, led to the price falling below 1.2680, but by the evening, pound buyers managed to win back losses and test 1.2800. At the same time, today the pair faces an equally important day, rich in foundations.

A meeting of the Bank of England is scheduled at 15:00 GMT+3, at which a decision on the base interest rate will be made. Analysts assume that the rate will remain at the same level (5.25%). What is important for market participants will be the number of votes of committee members for a rate reduction this year. If the number of officials who believe that the rate should be reduced at the next BoE meetings is more than one, the pound/US dollar pair may decline to 1.2700-1.2600. Otherwise, the price growth on the GBP/USD chart may resume in the direction of 1.3000-1.2900.

EUR/USD

The single European currency, after testing 1.0840, managed to grow by more than 100 points and strengthen above 1.0900. Technical analysis of EUR/USD shows that if the pair continues to grow, the price may test the important range of 1.1100-1.1000.

Today at 11:30 GMT+3, we are waiting for the publication of data on the business activity index in the manufacturing sector (PMI) of Germany for March. A little later, the index of business activity in the services sector for the same period will be published.

USD/JPY

The Japanese currency fell sharply after the end of the era of negative interest rates, announced at the Bank of Japan meeting last Tuesday. The USD/JPY pair went above 151, but so far it has not been possible to gain a foothold at the achieved highs. If sellers of the American currency manage to start a full-scale downward correction, the price on the USD/JPY chart may drop to 148.00-146.00.

Today at 15:30 GMT+3, we are waiting for data on the manufacturing activity index from the Philadelphia Federal Reserve Bank (USA) for March.

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