Euro remains capped below 1.1525 weighed by post-Fed US Dollar strength

The Euro (EUR) is trading practically flat against the US Dollar (USD) on Thursday, changing hands at 1.1504 at the time of writing, after failing to find acceptance above 1.1525. A hawkish hold by the Federal Reserve (Fed) provided a fresh boost to the USD on Wednesday, triggering a sharp reversal for the EUR/USD pair, which retraced in one session, all gains from the previous seven trading days.

The Fed left its benchmark rate in the 3.50%-3.75% range, in the first meeting chaired by Kevin Warsh, but the new central bank chief cleared any doubts about his commitment to bring inflation to the 2% target. The bank also removed references to an easing bias in a shortened monetary policy statement.

Fed officials acknowledged an improvement in economic activity and a stronger labour market, despite the uncertainty stemming from the Middle East conflict. In this context, nearly half of the committee members anticipate a rate hike before the year’s end, according to the bank’s “Dot Plot”, which did not include Warsh’s forecasts. US Treasury yields jumped after the event, and the US Dollar appreciated against its main peers.