Forex Today: Fed sent the dollar further lower

FXStreet Team FXStreet

What you need to know on Wednesday, May 11th:

The dollar ended the day lower against most major rivals, weaker against safe-haven rivals after a dovish US Federal Reserve. Equities initially rallied with the news but turned lower as Powell offered a speech, ending the day in the red.

The central bank left the benchmark interest rate unchanged at 0%-0.25% as widely expected. Among other things, the statement showed that policymakers will continue to buy Treasuries and mortgage-backed securities “at least at the current pace” over the coming months. The dot-plot showed that rates will remain at current levels until 2022. Powell reiterated that the central bank is ready to use its full range of tools to support the US economy. The GDP is seen falling by 6.5% this year, yet rising 5.0% in the next.

The EUR/USD pair hit 1.1422 and settled around 1.1390, while GBP/USD reached 1.2812 to finish at around 1.2750.

According to a leaked document, the European Parliament could veto any trade deal between the UK and the EU that fails to ensure fair competition and strong standards on the environment and workers’ rights.

Commodity-linked currencies rallied to fresh multi-week highs against the greenback, but trimmed most of their intraday gains ahead of the close, dragged lower by equities. The USD/JPY pair settled a few pips above 107.00.

Gold prices soared, with spot ending the day at around $1,736.60 a troy ounce. Crude oil prices advanced intraday but pulled back from highs alongside Wall Street.

Cryptocurrency Market News: Bitcoin’s attempt to crack $10,000 was stopped once again

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EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

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Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

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