Forex Today: Plenty of room for rate hikes, according to Fed’s Powell

Valeria Bednarik FXStreet

What you need to know on Thursday, January 27:

The dollar is ending Wednesday firmly higher across the FX board, following the US Federal Reserve monetary policy decision.

As widely anticipated, rates and taper were left unchanged, although the statement indicates that “ the Committee expects it will soon be appropriate to raise the target range for the federal funds rate.” Ahead of the event, most market participants priced in a rate hike in March. There were no mentions to the balance sheet, but market’s were not expecting those.

Chief Jerome Powell´s press conference was a mixture, as he expressed concerns about the current wave of coronavirus and its potential to damage the economy but also said that he expects inflation to decline over the course of the year. He added that the rate-hike path would depend on incoming data and noted that it is “impossible” to predict, although he also noted that there’s plenty of room to raise rates.

Gold was among the worst performers, shedding roughly $ 30.00 per troy ounce. The bright metal settled at $1,816 a troy ounce. Crude oil prices managed to retain gains, with WTI pulling back from a daily high of $87.92 to end the day at around $86.50 a barrel.

EUR/USD trades around 1.1240, while GBPUSD hovers around 1.3460. The AUD/USD pair nears the weekly low at 0.7089, while USDCAD is currently at 1.2670. The USD/JPY pair trades at 114.60.

Stocks trimmed early gains and turned red, with the DJIA down 154 points after trading up some 400 points ahead of the event.

US government bond yields jumped with the news, with that on the 10-year Treasury note peaking at 1.857%.

Top 3 Price Prediction Bitcoin, Ethereum, XRP: Cryptos to enjoy 20% upswing

Like this article? Help us with some feedback by answering this survey:

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD appears supported by the 200-day SMA, for now

Following an early pullback to multi-week lows near 1.1670, EUR/USD now manages to reclaim the 1.1700 region as the NA session draws to a close on Monday. The steep retracement in spot follows the equally strong move higher in the US Dollar, as investors continue to assess the geopolitical landscape in the wake of the US and Israel attacks on Iran.

GBP/USD hits new yearly lows near 1.3300

GBP/USD adds to the recent bearish tone, approaching to the key 1.3300 support to reach fresh YTD troughs against the backdrop of the robust performance of the US Dollar. Indeed, Cable’s decline comes amid the firm demand for the safe-haven space in the wake of the US and Israel attacks to Iran.

Gold clings to gains as US-Iran conflict continues to underpin safe-haven assets

Gold retains positive bias for the fifth consecutive day on Tuesday as rising geopolitical tensions in the Middle East continue to underpin safe-haven assets. However, a bullish US Dollar could keep the bullion below its highest level since late January, set on Monday, warranting caution before positioning for any further appreciation.