Around 10:30 p.m., the euro gained 0.33%, to 1.0451 dollars for one euro, following falling to 1.0359 dollars.
The dollar first surged before falling just as sharply on Wednesday following the announcement of a sharp rate hike by the US central bank (Fed), traders regretting a speech deemed too moderate by its president, Jerome Powell.
In the minutes following the announcement of a 0.75 percentage point hike in the Fed’s key rate, bringing it to a range of 1.50% to 1.75%, the greenback accelerated to close to its highest level since 2017 once morest the euro.
But once Jerome Powell’s press conference started, he wiped out his gains, to the point of posting a decline from the day before.
Around 8:30 p.m. GMT, the euro gained 0.33%, to 1.0451 dollars for one euro, following falling to 1.0359 dollars. The “buck”, another nickname for the dollar, even lost 1.30% once morest the yen and 1.47% once morest the pound sterling.
For Juan Manuel Herrera, of Scotiabank, the operators were disappointed that the chairman of the Federal Reserve did not give more guarantees on the trajectory of American monetary policy.
“Attention has been on President Powell’s comment that he +doesn’t expect moves like today’s (in rates) to become normal+,” analysts said. Wells Fargo, in a note.
“The market took that as a dovish message,” said Marc Chandler of broker Bannockburn Global Forex.
Currency traders immediately recalibrated their monetary policy outlook, he said, now estimating a 60% chance of another 0.75 percentage point hike at the Fed’s next meeting in July. , compared to 100% so far.
For the analyst, the announcement of the increase on Wednesday having been previously integrated by the market, the dollar also suffered from profit taking, which penalized it once morest most major currencies.
Traders also took into account the downward revision of growth forecasts in the United States this year and next. The Fed is only expecting GDP growth of 1.7% in 2022 and 2023, once morest 2.8% and 2.2% respectively so far.
The US central bank has also revised, this time upwards, its unemployment rate estimates for this year and the next two, as well as inflation for 2022.
“These forecasts suggest a chaotic landing (of the economy) rather than a soft one,” said Marc Chandler, which would not play in favor of the dollar.
