(Reuters.) – Thursday’s euro gain was due to optimism about progress in the talks between Russia, Ukraine. The Federal Reserve’s decision not to raise rates or tackle inflation aggressively by raising them did little to impact the market. But the standard for a hawkish surprise high was set.

The Fed released new projections that showed they are prepared to push their inflation battle into high gear. They see the federal fund rate increasing to an area between 1.75% to 2% by 2022.

“Considering the very hawkish FOMC meeting, yesterday’s market reaction was not particularly impressive, indicating that investors were already pricing in a rather aggressive hiking cycle,” Unicredit (MI:) analysts said.

The, which is used to measure the strength of six currency trading pairs, dropped 0.3%. The FOMC members noted that “the U.S. forward-curve had already been subject to a significant degree of tightening” before they met, which could slow down further USD appreciation.

Despite the unending fighting between Russia, Ukraine and other countries, both sides spoke of peace negotiations progress. Moscow announced that talks resumed by videolink on Thursday to discuss military, humanitarian, and political issues.

1.167 was the highest level of $1.167 for a week, an increase of 0.3%.

“What is important for the foreign exchange market is whether the likelihood of an energy crisis decreases, which would be clearly inflationary and relevant to the exchange rate for many reasons,” Commerzbank (DE:) analysts said.

“A very fragile peace would perhaps only help moderately in this respect,” they added.

Japan’s yen fell 0.1% to 118.67, within striking distance of its lowest since February 2016, hit on Wednesday at 119.12 as the Bank of Japan (BoJ) ruled out tightening monetary policy.

Japan’s inflation target of 2.2% is not likely, even taking into account rising energy prices, BoJ Governor Haruhikokuroda stated. Therefore, it makes sense to keep monetary policy extremely easy at the policy meeting on Friday.

Investors are waiting to see the Bank of England’s policy decision. The pound is currently strengthening against the US dollar, while the Bank of England rate meeting results are still unknown. However, money market prices indicate that there is a roughly 70% chance of a 50% increase in the Bank of England’s base rate. [IRPR]

Australian dollars rose 0.5% against the greenback to 0.7328 after activity rebounded from Omicron infected.