The EUR/USD pair declined slightly as traders waited for the upcoming Federal Open Market Committee (FOMC) interest rate decision.
The meeting comes at a time when recent data have been supportive of the American economy. For example, earlier this month, data revealed that the American unemployment rate declined to a pandemic-era low of 3.9%. This means that the country is in a full-employment situation.
Additional data showed that the country’s inflation was also rising. The headline consumer price index rose to a 42-year high of 7%. Excluding food and energy prices, data showed that inflation has jumped to over 5% in December. At the same time, data showed that the American building permits and housing starts jumped sharply in December. Home prices have also done well, helped by the relatively low consumer inflation data. The only negative data was December’s retail sales numbers.
Therefore, there is a likelihood that the Federal Reserve will sound a bit hawkish when it delivers its interest rate decision today. Analysts expect that the bank will leave interest rates at the current range of 0% and 0.25%. At the same time, the bank is expected to hint that it will implement between 3 and 4 rate hikes this year.
The EUR/USD pair has also been in a downward trend because of the rising risks in the financial market. This explains why the S&P 500 and Nasdaq 100 indices have declined into the correction zone. Investors are both worried about rising inflation and the ongoing crisis about the United States and Russia.pattern that is shown in blue. The pair managed to move above the upper side of the ascending triangle pattern in January and rose to a high of 1.1487.