Euro Hits the Lowest Since Early 2003 In The Wake of FED’s Decision

In the aftermath of the event that the U.S. Federal Reserve (FED) announced its first interest-rate increase of 2016 on Wednesday, the greenback extended its strong rally versus all of its peers including the euro on Thursday.

The pair EURUSD hit fell more than 1.3% to an intraday nadir of $1.03984 – the lowest level for more than a decade as the Fed had signaled a more aggressive outlook for interest rate policy in coming years. After hiking its target for overnight borrowing costs by 0.25 percentage point to a range of 0.5 percent to 0.75 percent, the central bank stated that it expected the median fed-funds rate to be 1.4% by the end of 2017, soaring to 2.1% at the end of 2018 and 2.9% in 2019.

This means that there will be three quarter-percentage-point interest-rate increases over each of the next three years. This pace is faster than what was forecast in September, when there were only two rate increases next year projected.

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