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EUR/USD Opens Sharply Higher After FOMC Surprise Rate Cut

March 16, 2020 by

EUR/USD opened sharply higher on Monday after the Federal Open Market Committee made another emergency interest rate cut, preferring not to wait for the scheduled monetary policy meeting later this week. The event overshadowed other Monday news, including US macroeconomic reports.

NY Empire State Index tumbled sharply from 12.9 in February to -21.5 in March — the lowest level since 2009. The actual reading was far below the 5.1 level predicted by analysts. (Event A on the chart.)

Net foreign purchases were at $20.9 billion in January. That is compared with the forecast value of $72.5 billion and the December reading of $85.6 billion. (Event B on the chart.)

FOMC caught markets off guard today, performing a big surprising interest rate instead of waiting for the scheduled two-day meeting on March 17–18. The Committee slashed the target range for the federal funds rate by a whole percentage point to 0%-0.25%. (Not shown on the chart.) Unsurprisingly, the coronavirus threat was the reason behind the decision as the statement said:

The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook.

If you have any comments on the recent EUR/USD action, please reply using the form below.

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