Fed Cuts Rate Hike Expectations: What it Means for EURUSD

The Federal Reserve's recent meeting has led to a significant shift in market expectations regarding interest rate hikes. The Fed left interest rates unchanged, but its communication emphasized caution and a reluctance to declare victory over inflation too quickly.

Before the meeting, markets were pricing in two more rate hikes this year, but that scenario is now less likely. This change reduces one of the key sources of support for the US dollar.

US economic data shows slowing GDP growth and gradually easing PCE inflation, but the labour market remains strong. This mixed picture creates a challenge for the Fed in determining its next move.