EUR/USD drops toward 1.1100 as Fed cuts again but signals pause ahead
|- Federal Reserve cuts rates by 25bps as expected, two members dissent.
- US Dollar rises modestly across the board after the FOMC meeting, press conference awaited.
The EUR/USD dropped from 1.1135 to 1.1101 immediately after the Federal Reserve announced it cut rates by 25bps. The pair then bounced back to the level it was trading before the announcement and dropped back.
The US central bank, as widely expected, reduced the target rate for the Fed Funds to 1.5%-1.75%. It was the third cut in a row. According to analysts, the Fed signaled that at the next meeting, it might put monetary policy on hold. The FOMC changed the statement leaving the door open for a no change in rates at the next meeting. Kansas City Fed President Esther George and Boston Fed President Eric Rosengren voted against the decision, preferring to keep interest rate unchanged. Now attention turns to Chairman Powell, who will hold a press conference at 18:30 GMT.
The US Dollar rose across the board supported by the indication from the Fed that it may pause cutting rates at the next meeting. As of writing, EUR/USD trades at 1.1110, down 20 pips from the level it had before the meeting.
Still, EUR/USD remains above 1.1100 and also on top of daily lows. Under 1.1100, the next critical level is seen around 1.1070/80. On the upside, a break above 1.1125 would strengthen the bullish short-term outlook.
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