The dollar fell due to the Fed's decision
The US dollar fell a day earlier after the Fed said it did not expect an interest rate hike until 2023, although markets had assumed otherwise. In a statement after the meeting, it was noted that the Central Bank expects a rapid increase in economic growth and inflation in the United States this year. Before the Fed's announcement, the euro/dollar futures market was almost completely pricing in a rate hike by December 2022, and three hikes in 2023. While the improvement in the economic outlook did not immediately change the expectations of monetary policy makers regarding the interest rate, the distribution of opinions has changed. 7 of the 18 FOMC members now expect a rate hike in 2023, up from five in December.
Fed Chairman Jerome Powell also said at a press conference that the central bank is not yet considering a date for reducing asset purchases. If Powell had hinted at the possibility of a reduction in bond purchases, it would have triggered a much sharper bond sell-off and a further jump in yields, which would have pushed the dollar higher. Nevertheless, the US currency quickly regained its position. Already on Thursday, prices returned to previous levels, as a halt in the use of the vaccine in Europe, continuing quarantine restrictions and delays in the distribution of the Recovery Fund suggest a slow path of recovery of the EU economy.