The March FOMC meeting seems merely procedural at this point. The Federal Reserve will hike its main rate to 0.75-1.00%, citing further improvement in the labor market (the latest NFP report showed the unemployment rate at 4.7%) and evidence that inflation has started to push through its medium-term target of +2%. The key for the US Dollar today, however, is to what degree of confidence the FOMC has in the US economy, or simply, ‘how quickly does the Fed think it will be able to raise rates next?’
Given the high expectations going into today’s meeting, the FOMC will need to take on a rather hawkish stance in order to see the US Dollar rally significantly further. EUR/USD itself may be currently predisposed for lower prices (and USD/JPY for higher prices given interest rate differentials), but the FOMC meeting will only yield such a result of the Fed rate hike expectations curve steepens – a difficult scenario to envision seeing as how markets have already moved quite far already.
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