Published by Global Banking & Finance Review®
Posted on March 18, 2025
3 min readLast updated: January 24, 2026
Add as preferred source on GoogleThe dollar fell against the euro as Germany approved a spending surge. The Federal Reserve's meeting may offer clues on U.S. interest rates.
By Saqib Iqbal Ahmed
NEW YORK (Reuters) -The dollar eased against the euro on Tuesday as Germany's parliament approved plans for a massive spending surge on Tuesday and as the Federal Reserve kicked off its March policy meeting that could offer clues to the path of U.S. interest rates.
The euro was 0.2% higher at $1.0945, after hitting $1.0954 earlier in the session, its highest since October 10.
The German parliament's approval of plans for a massive spending surge throws off decades of fiscal conservatism in hopes of reviving economic growth and scaling up military spending for a new era of European collective defence.
"Germany, and by extension the euro zone, getting their fiscal act together is not only long overdue, but supports the bull case for the common currency over the medium-term," Michael Brown, senior research strategist at Pepperstone, said.
The euro also found support earlier after data showed German investor morale improved more than expected in March.
More broadly, currency market moves were largely muted on Tuesday as investors awaited policy announcements from major central banks, including from the Federal Reserve on Wednesday.
While analysts expect the Fed to hold its monetary policy stance amid persistent inflation concerns, investors will be looking to new economic projections from Fed officials for evidence of how U.S. central bankers view the likely impact of Trump administration policies.
"The SEP (Summary of Economic Projections) will be the most interesting aspect, I imagine, with near-term inflation expectations likely nudged higher, and growth projections marked down a touch, though conviction behind those forecasts is going to be lacking, amid the ever-changing macro outlook," Brown said.
The greenback hit a two-week high against the yen before paring gains to trade about unchanged on the day at 149.165 yen, ahead of Wednesday's policy decision by the Bank of Japan.
BOJ policymakers are expected to discuss just how much of a risk the escalating U.S. trade war poses to Japan's economy.
"We would expect this adjustment in the pricing of the terminal rate to be maintained following the BoJ meeting," said Lee Hardman, senior currency analyst at MUFG, referring to market expectations that rose from around 0.90% at the end of 2024 to close to 1.20%.
Elsewhere, the Australian dollar slipped 0.4% to $0.6358 after rising to its highest in about a month on Monday.
Bitcoin, the world's largest cryptocurrency by market cap, was down 2.5% at $81,922.
(Reporting by Saqib Iqbal Ahmed; Additional reporting by Stefano Rebaudo; Editing by Bernadette Baum and Nick Zieminski)
The article discusses the dollar easing against the euro following Germany's spending surge approval and the Federal Reserve's policy meeting.
The euro rose 0.2% against the dollar, reaching its highest level since October 10.
Investors are awaiting policy announcements from major central banks, including the Federal Reserve and the Bank of Japan.
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