The United States Central Bank, known as The Fed, announced early on Thursday (March 20, 2025) that it would maintain interest rates between 4.25% and 4.5%, while still projecting two rate cuts within the year.
However, this powerful central bank has revised its economic growth projections for the United States, lowering the GDP forecast for the year to 1.7%, down from the previously estimated 2.1% provided back in December.
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This announcement is expected to significantly impact market movements during European trading hours.
GOLD
Gold prices (XAUUSD) have surged to a record high, reaching US$ 3,057 per troy ounce today. The Fed’s downgrade of the GDP forecast combined with an upward revision of inflation expectations has driven Gold prices higher.
This situation indicates a slowdown in the US economy, leading to increased demand for Gold as a safe haven, which subsequently boosts its price. This sentiment is likely to continue influencing the Gold market during European trading hours.
OIL
Oil prices (CLS10) rose by US$ 0.45 to US$ 67.41 per troy ounce during Thursday’s trading. Despite this increase, negative sentiment looms over the oil market, particularly due to the potential increase in supply from Russia if a ceasefire with Ukraine is secured.
Furthermore, the anticipated slowdown in the US economy poses a risk of reduced demand, which will continue to put pressure on oil prices.
EURUSD
The EURUSD pair fell by 422 points (42.2 pips) to 1.09205 in Thursday’s trading session, impacted by the crash of the Turkish lira.
This crash prompted profit-taking in the EURUSD, which had reached a four-month high. However, The Fed’s lowered GDP forecast for the US adds pressure to the US dollar, creating a positive sentiment for EURUSD in the European session.
GBPUSD
The GBPUSD pair recorded a slight increase to 1.30029 during trading on Thursday, after dipping to 1.29547. This morning, GBPUSD climbed back to 1.30146, marking the highest level since November 6.
In the European trading session, the release of UK employment data at 14:00 WIB could influence GBPUSD. The forecast by Trading Central indicates that the employment change in January will be 80,000, a decline from the previous month’s figure of 107,000. The unemployment rate is expected to remain at 4.4%.
GBPUSD could experience positive sentiment if the employment change exceeds the forecast while the unemployment rate falls below 4.4%. This could strengthen expectations for a relatively hawkish stance from the Bank of England (BoE) when they announce monetary policy later tonight.
USDJPY
The USDJPY pair dropped by 577 points (57.7 pips) to 148.685 during trading on Thursday, after rising to 150.144 earlier. This morning, USDJPY fell further to 148.179, indicating a weakening of the US dollar following The Fed’s downgrade of the US economic growth forecast.
The ongoing sentiment is likely to affect USDJPY movements in the European trading session.
Nasdaq
The Nasdaq experienced a surge of 450 index points, reaching 19,945 in Thursday’s trading, and has further increased to 20,091 today.
The Fed’s ongoing projection for two interest rate cuts this year contributes positively to the Nasdaq’s performance. If the US economy continues to weaken, there is potential for more aggressive rate cuts, which will also influence Nasdaq’s movements during the European trading session.
