The euro rose in European trading on Thursday against a basket of global currencies, resuming its recovery from seven-month lows against the US dollar, supported by buying activity at cheaper levels and a weaker US currency following the Federal Reserve meeting.

The European Central Bank is set to conclude later today its second monetary policy meeting of 2026, with expectations that interest rates will remain unchanged for the sixth consecutive meeting. The upcoming statement is expected to provide further signals and clarity بشأن the future path of interest rates this year.

Price overview

Euro exchange rate today: the euro rose 0.35% against the dollar to $1.1491, from the session opening level of $1.1452, after recording a low of $1.1450.

The euro ended Wednesday’s trading down 0.75% against the dollar, marking its first loss in three days, following strong US economic data and a pause in its recovery from a seven-month low of $1.1411.

European Central Bank

The European Central Bank will conclude later today its regular monetary policy meeting, with expectations for rates to remain unchanged, while the policy statement is likely to provide further insight into the trajectory of interest rates throughout the year.

Expectations are currently stable for keeping European interest rates unchanged at 2.15%, the lowest level since October 2022, for the sixth consecutive meeting.

The interest rate decision and monetary policy statement are due at 13:15 GMT, followed by a press conference from ECB President Christine Lagarde at 13:45 GMT.

Euro outlook

According to FX News Today, if the European Central Bank’s comments come in more hawkish than expected, this would reduce the likelihood of interest rate cuts this year and support further gains in the euro against a basket of global currencies.

US dollar

The dollar index fell 0.25% on Thursday, reflecting weakness in the US currency against a basket of global currencies.

On Wednesday, the Federal Reserve kept interest rates unchanged for the second consecutive meeting, while projecting higher inflation, stable unemployment, and only one rate cut in borrowing costs this year.

Federal Reserve Chair Jerome Powell described this outlook as highly uncertain, as policymakers assess the impact of US-Israeli strikes on Iran.

The Japanese yen rose in Asian trading on Thursday against a basket of major and minor currencies, resuming its recovery against the US dollar and stabilizing above a 20-month low, supported by renewed buying from lower levels following the Bank of Japan’s monetary policy decision.

The Bank of Japan kept interest rates unchanged for the second consecutive meeting, stating that the Japanese economy is “recovering moderately” despite uncertainty stemming from geopolitical conflicts.

Price overview

Japanese yen exchange rate today: the dollar fell 0.2% against the yen to ¥159.54, from the session opening level of ¥159.81, after recording a high of ¥159.85.

The yen ended Wednesday’s trading down more than 0.5% against the dollar, marking its first loss in three days, after hitting a 20-month low of ¥159.90.

Bank of Japan

In line with most market expectations, the Bank of Japan on Thursday kept its benchmark interest rate unchanged at 0.75%, the highest level since 1995, for the second consecutive meeting.

The decision to hold rates was approved by an 8–1 vote, with one member calling for a 25 basis point increase to 1.0%, as policymakers preferred to pause and assess recent economic developments.

The Bank of Japan warned that the war with Iran and tensions in the Middle East are pushing crude oil prices higher, creating upward pressure on core inflation in Japan.

The central bank added that while core inflation is expected to temporarily slow below 2% in the near term due to easing rice price increases, the Middle East conflict will exert upward pressure driven by the recent rise in crude oil prices.

Japanese interest rates

Following the meeting, market pricing for a 25 basis point rate hike at the April meeting remained below 30%.

Investors are awaiting further data on inflation, unemployment, and wages in Japan to reassess these expectations.

Kazuo Ueda

Bank of Japan Governor Kazuo Ueda is scheduled to speak shortly on the outcome of the policy meeting, with his comments expected to provide further strong clues about the future path of policy normalization and interest rate hikes this year.

Opinions and analysis

Analysts at Capital Economics wrote that the Bank of Japan did not reveal much by keeping rates unchanged today, but they still expect a rate hike at the next meeting in April.

They added that the brief statement provided little clarity on the future path of monetary policy, and that more insight is likely to come from Governor Ueda’s press conference later today.

US dollar

The dollar index fell 0.25% on Thursday, reflecting weakness in the US currency against a basket of global currencies.

On Wednesday, the Federal Reserve kept interest rates unchanged for the second consecutive meeting, while projecting higher inflation, stable unemployment, and only one rate cut this year.

Federal Reserve Chair Jerome Powell described this outlook as highly uncertain, as policymakers assess the impact of US-Israeli strikes on Iran.

Wall Street closed sharply lower on Wednesday after the US Federal Reserve kept interest rates unchanged and projected only one rate cut this year, as officials assessed economic risks stemming from higher oil prices and the war between the United States, Israel, and Iran.

Updated projections from policymakers at the US central bank showed that the benchmark interest rate would decline by just a quarter percentage point by year-end, with no indication of the timing.

Major US stock indices extended their losses following Federal Reserve Chair Jerome Powell’s press conference, where he reiterated the uncertainty the war poses to the economic outlook.

Michael Rosen, Chief Investment Officer at Angeles Investments in Santa Monica, California, said: “The Fed is in wait-and-see mode. With inflation still above target, the economy running above trend, and elevated uncertainty around the path of the Iran war, there is no justification for easing policy.” He added: “The Fed’s biggest challenge, worsened by the war, is balancing its dual mandate of full employment and low, stable inflation. If the war persists and oil prices remain high, the economy will slow. But easing policy would be a mistake because it would fuel inflation.”

Earlier, the US Labor Department reported that producer prices rose 3.4% year-on-year, exceeding economists’ expectations of 2.9%, with the potential for further acceleration due to the Middle East conflict and rising shipping and oil costs.

Brent crude prices rose to nearly $110 per barrel following reports of attacks on Iranian oil facilities in the Pars and Asaluyeh regions.

On the indices front, the S&P 500 fell 1.36%, or about 91 points, to close at 6,624.70, its lowest level in nearly four months. The Nasdaq Composite declined 1.46%, or 327 points, to 22,152.42, while the Dow Jones Industrial Average dropped 1.63%, or about 768 points, to 46,225.15.

All 11 sectors of the S&P 500 ended lower, led by consumer staples, down 2.44%, followed by consumer discretionary, down 2.32%.

At the company level, AMD shares rose 1.6% after reaching an agreement with Samsung Electronics to expand their strategic partnership in supplying memory chips for AI infrastructure, while Nvidia fell 0.8% after receiving Beijing’s approval to sell its second-most advanced AI chips in China.

Micron Technology shares declined about 0.5% despite beating quarterly revenue estimates, supported by strong demand for AI-related memory chips. Meanwhile, Apollo Global Management rose 2.1% after rebounding from last week’s losses, Lululemon gained 3.8% following its earnings release, and Macy’s jumped 4.7% after forecasting a smaller tariff impact in the second half of the year and reporting better-than-expected quarterly profits.

Declining stocks dominated the market, outnumbering advancers on the S&P 500 by a ratio of 5.2 to 1, with 17 new highs and 15 new lows recorded. On the Nasdaq, 42 stocks hit new highs while 218 recorded new lows.

Trading volume on US exchanges was relatively light, with 19.4 billion shares changing hands, compared with an average of 19.8 billion over the past 20 sessions.

Gold prices fell on Wednesday after the US Federal Reserve kept its overnight interest rate unchanged, in line with expectations.

Spot gold traded down 2.2% at $4,895.61 per ounce, while gold futures declined 2.4% to $4,889.80 per ounce.

Despite holding policy steady, the Fed projected one rate cut in 2026, also pointing to uncertainty stemming from the war between the United States and Iran.

In its statement, the central bank said: “The implications of developments in the Middle East for the US economy remain uncertain.”