On Tuesday, the dollar weakened against the euro, bolstered by the German parliament's approval of a significant increase in spending plans, while the market focused on updates from the Federal Reserve's policy meeting. The euro rose 0.2% to $1.0945, briefly touching $1.0954, its highest level since last October.
The German parliament approved plans to expand fiscal spending, marking a departure from decades of fiscal conservatism aimed at boosting economic growth and increasing defense spending. Market analysts believe this decision will not only help drive growth in Germany and the eurozone but could also support the euro in the medium to long term. Michael Brown, Senior Research Strategist at Pepperstone, stated: "It has long been necessary for Germany and the eurozone to adjust fiscal policies, and this move supports the upward trend of the euro in the medium term."
Additionally, Germany's March investor confidence index exceeded market expectations, providing additional support for the euro. However, the overall foreign exchange market remained relatively calm, as investors generally awaited the Federal Reserve's policy statement.
The Federal Reserve has begun its two-day March policy meeting and is expected to announce its decisions on Wednesday. Although the market widely expects the Federal Reserve to maintain its current monetary policy stance, investors are watching closely for the latest economic forecasts from the Fed, particularly how it assesses the potential impact of the Trump administration's policies on the economy. Brown said: "The Summary of Economic Projections (SEP) is likely to be the section the market pays most attention to. Short-term inflation expectations might be slightly adjusted upwards, while growth forecasts could be slightly revised downwards."
During the day, the dollar reached a two-week high of 149.31 yen, before pulling back to 149.165 yen, remaining nearly unchanged for the day. The Bank of Japan is set to announce its policy decision on Wednesday, with expectations that its policymakers will discuss the impact of the escalating global trade war on the Japanese economy, especially the risks posed by recent changes in U.S. trade policy.
Regarding other currencies, the Australian dollar fell by 0.4% to 0.6358 USD, after reaching a one-month high on Monday, as market sentiment remains affected by uncertainties in the global economic outlook.
Overall, the market is focusing on the Federal Reserve's policy meeting and its adjustments to economic forecasts. The monetary policy directions of major global central banks will continue to dominate the foreign exchange market trends.
