Market Drivers – US Session: USD Stabilizes as Markets Digest Fed’s Latest Moves

The U.S. dollar regained its footing on Thursday, March 20, 2025, halting a streak of three consecutive daily declines. This stabilization came after the Federal Reserve opted to keep interest rates unchanged at its latest meeting, a decision that aligned with widespread market expectations. The US Dollar Index (DXY) saw renewed buying interest, rebounding from multi-month lows despite a dip in U.S. yields across the curve following the Fed’s announcement. Investors now turn their attention to a busy economic calendar, featuring key releases like the weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, Existing Home Sales, and the CB Leading Index.

Currency Markets React to Fed’s Steady Hand

The Fed’s decision rippled through global currency markets. The EUR/USD pair saw a sharp retreat, slipping back below the 1.0900 level as sentiment around the Greenback improved. In Europe, attention shifts to upcoming data, including Germany’s Producer Prices and Construction Output figures for the broader euro area. Adding to the mix, ECB officials Christine Lagarde and Philip Lane are scheduled to speak, potentially offering further insight into the region’s monetary policy direction.

Meanwhile, GBP/USD faced renewed selling pressure, sliding to a two-day low near 1.2960 before staging a modest recovery. The British pound’s trajectory will likely hinge on a packed UK economic docket, headlined by the Bank of England’s interest rate decision. This will be accompanied by the latest labour market report and the CBI Industrial Trends Orders, making it a pivotal day for UK-focused traders.

Across the Pacific, USD/JPY briefly surpassed the 150.00 mark but pulled back to around 148.80 in the wake of the Fed’s decision. Japan’s economic calendar offers its own highlights, with the Inflation Rate and weekly Foreign Bond Investment data due next, providing clues about the yen’s near-term path.

In the Antipodes, AUD/USD remained under pressure, dropping to the low-0.6300s and nearing three-day lows. The Australian dollar’s weakness persists ahead of the country’s labour market report.

Commodities: Oil and Precious Metals in Focus

On the commodity front, West Texas Intermediate (WTI) crude oil prices edged higher, crossing the $67.00-per-barrel threshold. Traders are weighing the implications of U.S. trade policy and escalating geopolitical tensions stemming from the Russia-Ukraine conflict, both of which continue to influence oil market dynamics.

Gold, meanwhile, soared to a record high above $3,050 per ounce, buoyed by the Fed’s signal of two potential rate cuts in 2025 and a broad decline in U.S. yields. The precious metal’s rally underscores its appeal as a safe-haven asset amid shifting monetary expectations. Silver, however, faced some selling pressure after hitting yearly highs above $34.00 per ounce the previous day, highlighting a divergence in precious metals’ performance.

As markets digest the Fed’s latest stance, Thursday’s data releases and central bank commentary will likely set the tone for the dollar and its counterparts. From manufacturing insights in the U.S. to monetary policy cues in the UK’s BoE, and Europe, investors have plenty to unpack as they navigate this eventful day in global finance.