EURUSD rose after the Fed meeting. Overview for 18.03.2021

EURUSD survived a volatile Wednesday and is slowly falling on Thursday. 

The major currency pair remains in the turbulence zone after Wednesday evening when changes in the Fed outlook knocked investors off their feet. The current quote for the instrument is 1.1960.

The US Federal Reserve meeting was pretty vivid, just as expected. The regulator kept major aspects of its monetary policy, such as the rate and stimulus programs, unchanged. However, the comments that followed after the meeting and changes in the economic outlook made financial markets quite volatile.

In the comments, the Fed said that the economic recovery in the country boosted a bit but the global trajectory of this recovery would pretty much depend on the pandemic. The Fed will also continue buying $120 billion in bonds per month — $80 billion in Treasury securities, plus $40 billion in mortgage-backed debt – until it reaches the target. Four officials penciled in rate increases in 2033, seven – by the end of 2023, while all 11 saw that policy tool remaining on hold this year.

As for estimations, they’re quite interesting. The FOMC's median estimate for the 2021 GDP growth rose to 6.5% in 2021 and 3.3% for 2022. Inflation may reach 2.4% in 2021, up from the previous 1.8% estimate.  The unemployment rate is now expected to dip to 4.5% in 2021, an improvement from the prior forecast of 5%, and 3.9% in 2022. 

The benchmark interest rate may be 0.1% in 2021-2023 and then 2.5% in the long-term. 

So, the Fed can see the activity in the markets and believes that it will get only better in the future. Basically, estimations match the current situation because a new stimulus package will help the system from the inside.