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EUR/USD Drops As US Dollar After Fed Policy
Thursday, 20 March 2025 19:22 WIB | EUR/USD |EUR/USD

EUR/USD slumped near 1.0830 as the US Dollar (USD) strengthened, while investors digested the gloomy outlook for the US economy under President Donald Trump, anticipated by the Federal Reserve (Fed). The US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, rose near 104.00.

On Wednesday, the Fed left its key lending rate unchanged in a range of 4.25%-4.50%, as expected, for the second straight day and stuck to its guidance for two rate cuts this year as projected in its December policy meeting. The Fed said it was in no rush to adjust monetary policy amid "very high" uncertainty over the President's policy. "We are not going to rush to continue cutting interest rates," Fed Chairman Jerome Powell said in a press conference because "rates tend to lower growth and raise inflation." The Fed revised its forecast for the core Personal Consumption Expenditure (PCE) Price Index this year to 2.8%, up from the 2.5% projected at its December meeting. The central bank revised its Gross Domestic Product (GDP) growth this year lower to 1.7% from its previous estimate of 2.1%, although it remains confident that labor market conditions are solid.

Contrary to the Fed's "wait and see approach," US President Trump said the central bank should cut interest rates as the impact of tariffs is shifting through the economy. "The Fed would be much better off cutting rates as US tariffs are shifting (easing!) through the economy. Do the right thing," Trump said in a post on Truth Social after the Fed's policy decision. Trump has advocated lower interest rates to boost economic growth. (Newsmaker23)

Source: FXstreet

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