Eyes on Today’s FOMC Rate Decision

*Market eyes on todays FOMC rate decision to gauge the sentiment in the financial market.

*BoJ held the rate unchanged as opposed to the previous hawkish expectation; Yen turned weaker.

*Eurozone CPI is due today and may help to boost the euros strength.

Market Summary

The market‘s attention is fully locked on today’s FOMC rate decision, with expectations firmly leaning toward the Fed keeping rates unchanged. However, traders are more focused on Fed Chair Jerome Powells post-decision remarks for any hints on future policy direction. The dollar remains fragile, hovering near its recent lows as dovish expectations continue to weigh on the greenback.

Wall Street, which had enjoyed a two-session rally, reversed course in the last session, with all three major indices closing lower amid heightened uncertainty ahead of the Feds announcement. Meanwhile, the Bank of Japan held its interest rate steady, reinforcing its dovish stance. This decision weakened the Japanese yen but provided a boost to the Nikkei, which edged higher in response to the continued accommodative policy.

With multiple central bank decisions in focus and geopolitical tensions in the Red Sea still a concern, gold surged to a fresh all-time high above $3,030, reflecting strong demand for safe-haven assets. Conversely, oil prices slid by more than 1% in the last session after the market perceived easing geopolitical risks in Europe. Russian President Vladimir Putin reportedly agreed in a phone call with the U.S. President to a ceasefire deal with Ukraine, easing concerns of further escalation in the region.

In the forex market, aside from the Feds decision, euro traders are also closely monitoring the upcoming eurozone CPI release. Should the inflation print exceed market expectations, it could fuel further upside momentum for the euro, strengthening its position against the dollar.

Current rate hike bets on 19th March Fed interest rate decision:

Source: CME Fedwatch Tool

0 bps (95%) VS -25 bps (5%)

Market Movements

DOLLAR_INDX, H4

The Dollar Index remains flat as traders await the FOMC decision. The Fed is widely expected to hold rates steady at 4.25%-4.5%, maintaining a wait-and-see approach amid policy uncertainties under US President Donald Trump. With limited US catalysts, investors will focus on the Feds policy statement for hints about future monetary policy direction.

The Dollar Index is trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 28, suggesting the index might enter oversold territory.

Resistance level: 105.05, 106.25

Support level: 103.20, 101.70

EUR/USD, H4

The EUR/USD pair edged higher in the last session but is now encountering strong resistance near the 1.0960 mark. A decisive break above this level, particularly after a week-long consolidation, could serve as a solid bullish signal, potentially setting the stage for further gains. The upcoming eurozone CPI release remains a key focus for euro traders. Market expectations point to a softer inflation print compared to the previous reading, which could cap the euros upside momentum. However, with the dollar struggling to regain strength amid dovish Fed expectations, the euro may still capitalize on a weaker greenback and push higher. Should the pair successfully breach its immediate resistance, it could open the door for a further rally toward higher price levels.

The pair remains trading with a higher-high price pattern, suggesting a bullish bias. The RSI remains close to the overbought zone, while the MACD shows signs of rebounding from above the zero line, in line with the view that the pair is trading with bullish momentum.

Resistance level: 1.1075, 1.1198

Support level: 1.8060, 1.0672

USD/JPY, H4

The USD/JPY has surged past the critical resistance level at 149.50, reinforcing a bullish bias for the pair. The Bank of Japans latest interest rate decision aligned with market expectations, opting to keep rates unchanged. This move has further weighed on the Japanese Yen, which continues to trade with a weak tone, allowing the pair to reach a fresh weekly high. With the BoJ maintaining its dovish stance amid ongoing economic uncertainties, the Yen remains vulnerable, providing room for further upside in USD/JPY. If the pair sustains momentum above the 149.50 level, a test of the psychological 150.00 mark could be the next key target for traders.

The pair has been trading in a higher-high price pattern since last week and has broken its resistance level, suggesting a bullish bias for the pair. The RSI has been moving upward, while the MACD has broken above the zero line and edged higher, suggesting that the bullish momentum has been growing.

Resistance level: 151.30, 154.00

Support level: 147.00, 143.80