The US Dollar experienced broad weakness as both the European Central Bank (ECB) and the Federal Reserve (Fed) kept interest rates unchanged, leading to significant rallies in major currency pairs. EUR/USD surged by more than 1.16%, trading at 1.1582 after rebounding from daily lows near 1.1440, driven by hawkish whispers from ECB policymakers who are reportedly ready to discuss rate hikes as soon as April, according to three sources speaking with Reuters [1]. The ECB maintained its deposit facility rate at 2%, main refinancing rate at 2.15%, and marginal lending rate at 2.40%, all unchanged [1]. ECB President Lagarde emphasized the Eurozone's resilience and stated that the central bank is taking a meeting-by-meeting, data-dependent approach to rate decisions [1].
Meanwhile, NZD/USD rallied to the 0.5870 level, up 1.30% on Thursday, despite weak New Zealand GDP data and the Fed's 'hawkish hold' [2]. New Zealand's GDP grew 0.2% QoQ in Q4, below the 0.4% expected and down from 0.9% in the previous quarter. Year-on-year growth was 1.3%, missing forecasts of 1.7% but slightly higher than the prior reading of 1.1% [2]. Despite these figures, the New Zealand Dollar remained resilient, supported by US Dollar weakness [2].
In the US, the Fed kept rates steady at 3.50%-3.75%, with Chair Jerome Powell indicating a high bar for rate cuts and expressing caution about easing policy amid risks of higher inflation driven by energy prices [2]. US Initial Jobless Claims for the week ending March 14 declined to 205K, below the 215K expected and the previous 213K, signaling a resilient labor market [1][2]. Other US data showed New Home Sales in January fell -17.6% MoM, following December’s -1.7% contraction, attributed mostly to snowstorms [1]. US Treasury yields retreated after spiking on the data release, and money markets do not expect the Fed to lower rates throughout 2026, according to Prime Market Terminal [1].
Technical analysis for EUR/USD shows the pair trading at 1.1585 with a mildly bearish near-term bias, as price holds just below clustered simple moving averages around 1.1730 [1]. For NZD/USD, the near-term bias is mildly bullish, with price extending above the 20-period SMA near 0.5840 and trading beneath the declining 100-period SMA around 0.5902. The RSI advanced to 58, indicating improving upside momentum [2]. Immediate support for NZD/USD is at 0.5872, with resistance at 0.5892 and further upside possible if the pair breaks above the 100-period SMA cluster [2].
Looking ahead, the Eurozone will release Current Account, Balance of Trade, and Germany’s Producer Price Index (PPI) data, while US geopolitical developments are expected to influence the US Dollar's trajectory [1].
CONCLUSION
Both EUR/USD and NZD/USD posted strong gains as the US Dollar weakened following the Fed's decision to hold rates steady and cautious forward guidance. Despite mixed economic data from New Zealand and the Eurozone, currency markets responded positively to central bank signals and resilient labor data in the US. The market impact is high, with further direction likely dictated by upcoming Eurozone data and ongoing geopolitical developments.