EURUSD is compelled to retreat. Overview for 13.03.2024

The primary currency pair remains under pressure on Wednesday. The current exchange rate for EURUSD stands at 1.0925.

Following the release of a stream of US price statistics, the market began favouring the dollar again. Investors were prompted to revise their expectations regarding this year’s interest rate prospects as inflation proved stronger than anticipated.

The US Consumer Price Index (CPI) increased by 0.4% m/m in February, meeting expectations. The index rose to 3.2% year-on-year from 3.1% previously. Core inflation rose by 0.4% m/m, exceeding the expected 0.3%. Year-on-year, the indicator increased to 3.8% from the previous 3.7%.

None of this comes as a surprise. It was previously clear that prices in the US remained high even with interest rates remaining accommodative. Given the persistent price pressures in the US, the Fed may need more time to gather information; thus, the prospect of lowering interest rates seems even more uncertain now.

Currently, the market expects a rate cut at the June meeting, with this probability standing at 69%, down from the estimated 71% at the beginning of the week.

The next Federal Reserve meeting is scheduled for 19-20 March. Only the comments on the assessment of the current situation in the economy and financial sector will be of interest here. The time for making crucial decisions has yet to come.