BoE Interest Rate Announcement, U.S. Jobless Claims, Philly Fed Manufacturing Index

The EUR/USD remained supported above the 1.0900 level on Wednesday, benefiting from a softer U.S. dollar as the Federal Reserve opted to keep interest rates unchanged. The pair ended the session with minor losses.

Fed Chair Jerome Powell highlighted that growth projections for 2025 have been notably downgraded, citing uncertainty stemming from trade policies under the Trump administration. The Federal Open Market Committee (FOMC) revised its GDP forecast for the end of 2025 down to 1.7%, a sharp drop from the 2.1% estimate issued in December.

Powell maintained that the overall economic outlook remains stable. However, rate markets continue to reflect a growing expectation of monetary easing, with traders pricing in a 65% probability of a quarter-point rate cut—or larger—on June 18.

Looking ahead, European Central Bank President Christine Lagarde is set to speak later today, coinciding with the start of the EU Leadership Summit.

Gold prices surged to a new all-time high of $3,052 on Wednesday as Federal Reserve Chair Jerome Powell addressed the markets following the Fed’s decision to keep interest rates unchanged.

The Fed opted to maintain its benchmark interest rate within the 4.25%–4.50% range while announcing plans to slow its balance sheet runoff starting in April. The central bank reaffirmed that labor market conditions remain strong, though it acknowledged that inflation remains "somewhat" elevated, reinforcing its commitment to balancing economic risks.

Meanwhile, ongoing geopolitical tensions continue to impact global markets. Despite diplomatic efforts to secure a temporary ceasefire, hostilities between Russia and Ukraine persist, with energy infrastructure remaining a key target. In the Middle East, the situation escalated further, with Israeli airstrikes reportedly resulting in 400 casualties on Tuesday.

Oil prices edged higher on Wednesday after U.S. government data revealed a decline in fuel inventories. However, gains were tempered by the Federal Reserve’s decision to hold interest rates steady, keeping broader economic concerns in focus.

Despite a 1.7-million-barrel rise in U.S. crude stockpiles, exceeding the 512,000-barrel forecast, diesel and heating oil inventories dropped 2.8 million barrels, far surpassing the expected 300,000-barrel decline, providing some support to oil prices.

Oil traders also kept a close watch on escalating geopolitical tensions. The Israeli military resumed ground operations in the central and southern Gaza Strip, just a day after local health workers reported more than 400 Palestinian casualties from airstrikes that shattered a ceasefire.

Meanwhile, U.S. President Donald Trump vowed to continue strikes on Yemen’s Houthi militants and warned that Iran would be held accountable for any attacks by the group, which has disrupted shipping in the Red Sea.

Bitcoin rebounded on Wednesday, ending the session with gains slightly more than 5% as market sentiment improved following the Federal Reserve’s decision to maintain its rate cut projections.

Bitcoin’s latest gains closely tracked movements in broader risk assets, as markets found relief in the Fed’s policy stance. While the central bank kept interest rates unchanged as expected, it acknowledged higher inflation and softer economic growth forecasts.

Fed Chair Jerome Powell highlighted persistent economic uncertainty, particularly considering President Donald Trump’s aggressive trade tariff policies.

Despite these concerns, the Fed’s overall tone supported market recovery, with Wall Street bouncing back from six-month lows on Wednesday. Crypto markets followed suit, as lower interest rate expectations generally favor speculative assets like Bitcoin.