The Euro fell after the Fed meeting. Overview for 28.01.2021

EURUSD plunged after the January meeting of the US Federal Reserve. 

The major currency pair stopped growing and started falling instead influenced by the Fed’s comments after its January meeting. The current quote for the instrument is 1.2090.

So, the Fed’s January meeting was rather neutral and the regulator kept the benchmark rate unchanged at 0-0.25%, and that’s the best variant for the American economy. The stimulus program continues and the Fed buys assets worth $120 billion every month. It’s huge money, which provides great support to the country’s economy. 

In the comments that followed the meeting, the regulator said that some of the observations clearly indicated improvements in the economic outlook for the second half of 2021 but inflation was still below the target level of 2%. The country’s economy turned out to be more resistant to both external and internal factors than was expected earlier and that’s good news. According to the Fed’s estimations, the vaccination against the COVID-19 might force the pandemic to retreat, thus making a positive impact on the economy. Yes, the system is still quite far away from the Fed’s targets on inflation, employment, and some other aspects but the regulator continues working on that.

The USD managed to find support in these comments and rose against the Euro. The latter, in its turn, got under significant pressure after the German government deteriorated its GPD outlook for 2021 from 4.4% to 3% due to the lockdown. 

The fact that the German economy is not the strongest one in the Euro Area anymore is the thing that one should get used to.