EUR/USD snaps two-day gains, eyes on ECB and Fed

The EUR/USD currency pair snapped a two-day string of gains on Wednesday ahead of the outcome of the European Central Bank’s and the Federal Reserve’s policy meetings.

The European Central Bank is largely expected to keep its main refinancing operations rate intact at 2.15% at its March 19th meeting.

And, the ECB deposit facility rate is expected to be kept at 2.00%.

ECB President Christine Lagarde had said that monetary policy was in a “good place” and played down concerns that a stronger Euro could pose a risk to the inflation outlook.

Lagarde’s remarks suggested that interest rates were likely to remain steady for the foreseeable future.

The ECB President also warned that inflation figures could move unevenly in the coming months, but emphasized that policy decisions should not be driven by any single release of data.

Meanwhile, the Federal Reserve is largely expected to leave its federal funds rate target range intact at 3.50%-3.75% at its March 17th-18th meeting, following three successive rate cuts last year.

In January, FOMC policy makers highlighted that economic activity had been expanding at a solid pace, job growth had remained slow, while inflation had remained somewhat elevated.

The minutes from the Federal Reserve’s January meeting showed that FOMC officials were divided over the future trajectory of interest rates. Several policy makers signaled that further rate cuts would likely be appropriate in case inflation continued to subside in line with their projections.

Others said that it might be prudent to keep the policy rate on hold for some time. Some FOMC members even argued that rate hikes could become necessary in case inflation remained elevated.

Investors will also be paying close attention to the press conference with Fed Chair Jerome Powell for clues over the timing of future interest rate cuts as well as to the new set of FOMC economic forecasts.

The EUR/USD currency pair was last down 0.08% on the day to trade at 1.1530.