The Euro dropped again. Overview for 07.04.2022

EURUSD continues falling; the “greenback” is too strong.

The major currency pair remains weak on Thursday. The current quote for the instrument is 1.0896.

According to the FOMC Meeting Minutes released yesterday, the regulator is ready to cut its portfolio by $95 billion every month, $35 billion of which are mortgage-backed securities and $60 billion – in treasury securities. It means that the Fed is going to cut 1% of its portfolio per month. 

Earlier, a monthly cut was expected to be between $60 and $90 billion. A higher value turned out to be stressful for market players. 

The Fed’s tough approach can be justified by inflation: in February, the CPI reached 7.9%, the highest reading in 40 years, while the target level for the indicator remains at 2%.

The document also confirmed that the benchmark interest rate will be raised by 50 basis points following the regulator’s May meeting, up to 0.50-0.75%.

Basically, all this was expected, but now investors drew confirmation from the Fed. In this light, demand for the USD as a “safe haven” asset significantly increased. Another supporting factor is geopolitical tensions. 

Later today, the European Central Bank is also going to publish the Monetary Policy Meeting Accounts. It is highly unlikely to contain any breakthrough information, but it is still worth reading.