EUR/USD hits levels above 1.0900 and retreats; DXY drops sharply after FOMC decision
- US Dollar collapses after the FOMC decision, DXY drops by more than 1%.
- Fed raises rates by 25 bps, as expected.
- EUR/USD rises a hundred pips, reaching the highest level since early February.
The US Dollar is falling sharply on Wednesday following the Federal Reserve meeting. The EUR/USD has risen so far more than a hundred pips and printed monthly highs above 1.0900.
As expected, the US central bank raised rates by 25 bps to 4.75% - 5.00%. In the statement, the Fed sounded dovish, suggesting no clear path of action for the future.
During the press conference, Chair Powell said that tighter credit conditions can be seen as a substitute for interest rate hikes. “Disinflation is absolutely occurring”, he said. Regarding the “dot plot”, Powell explained that Fed’s officials do not see a rate cut for this year.
US bonds soared after the FOMC meeting, pushing the US Dollar to the downside. Wall Street indices are moving between gains and losses, without a clear direction. Markets are not moving in sync.
The weaker US Dollar is keeping EUR/USD around 1.0900, at the momentum. The pair peaked at 1.0911 and then pulled back to the 1.0860 area. It is rising for the fifth consecutive day.
Powell speech: Isolated banking problems can threaten banking system if left unaddressed
Powell speech: Recent banking events will result in tighter credit conditions
Powell speech: Before banking stress, thought we would have to raise terminal rate
Powell speech: Tightening in credit conditions may mean monetary tightening has less work to do
Technical levels
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
