EUR/USD traded lower near a 10-day low of 1.0815 during the European session on Friday (3/21). The major currency pair faced selling pressure as the US Dollar (USD) strengthened after the Federal Reserve (Fed) stated that an interest rate cut is not on the cards in the current scenario. The US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, rose near 104.15.

On Wednesday, the Fed kept interest rates unchanged at 4.25%-4.50% for the second consecutive day, as expected. Fed Chairman Jerome Powell said in a press conference that the central bank will not be in a "rush" to move to a "rate cut". His comments supporting a tight monetary policy stance stemmed from "very high" uncertainty over the US economic outlook.

Powell commented that the implementation of new policies by US President Donald Trump could lead to an economic slowdown and increased inflationary pressures in the near term.

Meanwhile, investors are looking for meaningful updates on Trump's plan to impose reciprocal tariffs on April 2. Market participants expect the tariffs to hurt economic growth and increase price pressures across the globe. Globally, manufacturers will be forced to under-utilize their production capacities, which could lead to a renewed rise in cost-driven inflation.

On the economic front, investors will focus on the S&P Global Purchasing Managers' Index (PMI) data for March, due out on Monday. (Newsmaker23)

Source: FXstreet