The Federal Reserve raised interest rates for the first time since December 2018. It went from 0.25% to 0.50%.
Earlier, markets were debating how much the central bank will increase its rates this March, driven primarily by strong inflation in the US. But energy prices soared recently because of the conflict in Ukraine, so the outcome of the Fed meeting was softer than expected. Despite this, many still expect to see a 175 bp increase in rates this year.
Although a rate hike is bullish for dollar, the fact that many already expect it will limit the pressure on markets. Risk appetite may even soar, prompting a decrease in some USD pairs.
So what should be expected in the near future?
Although markets appear to have no serious prospects of turning yesterday's local growth into a rally, there is a chance for that today. But the tension in Ukraine will constrain investor optimism.
If there really is a demand for risky assets by the end of the week, the ICE dollar index will fall to 97.50 points.
Forecasts for today:
GBP/USD is trading under 1.3180. If buyers manage to overcome it, the pair will increase to 1.3275.
USD/CAD may decline to 1.2585, after breaking through 1.2670. The driver will be rising oil prices and local decline in dollar.