Fed’s Hawkish Outlook Rattles Investors, Eurozone Shows Signs of Recovery, Pound Steadies Amidst Uncertainty.

• The US dollar strengthened, reflecting caution among investors ahead of the Fed’s rate decision.
• Expectations of a more hawkish stance from the Fed increased amidst persistent inflationary pressures.
• US stocks experienced a sharp decline, ending a turbulent April amid anticipation of a hawkish pivot from Fed Chair Jerome Powell.
• The Eurozone showed signs of recovery as Euro strengthened following positive GDP data for Q1.
• Pound traded sideways amidst speculation about potential rate cuts by the Bank of England, influenced by shifts in risk appetite and anticipation of the Federal Reserve’s policy call.

USD: The dollar bounced back overnight and remained sturdy during the Asian session as investors treaded cautiously ahead of the Fed’s rate decision. With inflation pressures persisting, there’s anticipation for a more hawkish stance from the Fed. Concerns about potential rate hikes grew, especially with contrasting policies among major central banks. Meanwhile, US stocks plummeted, wrapping up a turbulent April with expectations of a hawkish tone from Fed Chair Jerome Powell. The Fed is expected to maintain rates, but Powell’s remarks will be pivotal in shaping market sentiment.

EUR: Euro strengthened against peers following positive GDP data for Q1, signaling an end to a short-lived recession in the Eurozone. Inflation remained steady, slightly above expectations, buoying the Euro. Despite sticky inflation, the Eurozone economy showed resilience, providing a positive outlook.

GBP: Pound traded sideways amid speculation about the Bank of England’s rate cuts. While interest rates are expected to remain unchanged in May, weakening inflation may sway policymakers towards loosening policies. Pound’s movement was also influenced by shifts in risk appetite. Eyes are now on the Federal Reserve’s policy call, with expectations of delayed rate cuts in the US, contrasting with potential cuts in the UK and Europe.