EUR renewed its peak of February. Overview for 23.03.2023

EURUSD increased vividly. The current quote is 1.0910.

The US Federal Reserve System did not risk giving up on lifting the interest rate, and investors got disappointed: the crisis in the banking sector had been heated up exactly by the growth of the interest rate.

The March meeting of the Fed closed in accordance with the market expectations: the interest rate increased by 25 base points, now amounting to 5.00% per annum. In the comments, the Fed mentioned that the decision had been made because of the growing risks for the financial system. Also, it was said that the cycle of the interest rate increases was not over yet, and further growth was possible.

According to the Fed’s comments, the banking system was reliable (as if they could say anything different); the CB and Ministry of Finance were doing everything to protect deposits. Regardless of the growth of its balance, the Fed has not yet launched any stimulation, nor has it put an end to the tightening of liquidity access. At that meeting, they, indeed, considered giving up lifting the interest rate but decided otherwise. Everything said by the Fed confirms that its main priority is to beat inflation. Banking problems will be solved somehow, while prices cannot drop on their own.

For the USD, those were the vague forecasts of future steps of the Fed that provoked so much pessimism.