Breaking: Fed leaves policy rate unchanged, USD weakens modestly with initial reaction

The Federal Open Market Committee (FOMC) on Wednesday announced that it left the benchmark interest rate, the target range for federal funds, unchanged at 0%-0.25% as widely expected. 

In its policy statement, the Fed reiterated that it is committed to using its full range of tools to support the US economy and noted that the path of the economy will depend on the course of the coronavirus outbreak.

Follow our live coverage of the FOMC decision and the market reaction.

Fed Press Conference: Chairman Jerome Powell speech live stream – July 29.

Market reaction

With the initial market reaction, the US Dollar Index (DXY) dropped to its lowest level in more than two years at 93.31 but didn't have a difficult time staging a modest rebound. As of writing, the DXY was down 0.37% on a daily basis at 93.38.

Related articles

Fed Quick Analysis: Gloom and doom to drive dollar even lower, and stocks may finally follow.

Reality bites – and the Federal Reserve has been unable to ignore it. The resurgence of coronavirus is already evident in jobless claims and consumer confidence figures – and the Fed probably has the Gross Domestic Product figures for the second quarter, reflecting the first wave's damage. 

EUR/USD hits fresh multi-year highs after FOMC, about to test 1.1800.

The EUR/USD pair was trading at fresh multi-year highs and after the released of the decision from the Federal Reserve peaked at 1.1792 and then pulled back modestly, finding support at 1.1770.

Key takeaways from the policy statement (via Reuters)

"Ongoing health crisis will weigh heavily on economic activity, employment, and inflation in the near term."

"Economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year."

"Epidemic poses considerable risks to the economic outlook over the medium term."

"Will keep dollar swap lines and FIMA repo facility for foreign central banks open through March 31."

"Will maintain treasury and agency-backed securities purchases at least at the current pace and continue overnight and term repo operations."

"Expecting to maintain the current fed funds rate until confident economy has weathered recent events and is on track to achieve central bank's maximum employment and price stability goals."

"Interest on excess reserves rate unchanged at 0.10%."

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD hits fresh one-month low amid souring market mood

EUR/USD has been extending its falls and dips below 1.21 as US retail sales badly disappointed and the worsening mood is supporting the safe-haven dollar. Markets digest Biden's stimulus plan. US Consumer Sentiment declined to 59.2 points. 


GBP/USD retreats toward 1.36 amid fresh dollar strength

GBP/US has pared its gains and falls toward 1.36 as the dollar gains ground. The UK economy shrank by 2.6% in November, better than estimated. The UK is ramping up its vaccination campaign and PM Johnson is pressured to ease the lockdown. 


Gold extends sideways grind near $1,850

The XAU/USD pair registered small daily gains on Thursday but struggled to extend its recovery amid a lack of significant fundamental drivers on Friday. As of writing, the pair was up 0.15% on a daily basis at $1,849.

Gold news

Forex Today: Markets “sell the fact” on Biden's stimulus, dollar rises, retail sales eyed

Markets are on the back foot after Biden hinted about tax hikes while introducing stimulus. The safe-haven dollar is edging higher despite Powell's pledge to keep monetary policy accommodative. 

Read more

DXY breaks above key downtrend, eyes move above 91.00

USD has been strongly supported on what has shaped up to be a very much risk off final trading day of the week. Most G10/USD pairs have seen significant weakness, aside from CHF/USD and JPY/USD, given that the two currencies are also considered “safe havens”.

US Dollar Index News