US Dollar approaches 13-month lows as FOMC disappoints markets
The US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, came under a renewed pressure after the FOMC released its July meeting statement. The index, which has been moving quietly around the 94 handle, quickly dropped to 93.50 and is now at 93.55, losing 0.4% on the day.
According to the press release, all of the Committee members voted to keep the interest rates unchanged at its current target range of 1.00% - 1.25%, which was widely expected. Although the July meeting statement looked nearly identical to the June statement, there were a couple of points of interest for the markets. The Committee, who in June said that the balance sheet normalization program would start "this year", changed its language to say that it would start "relatively soon."
This alteration in the language could have been assessed as a sign that the Fed might not begin shrinking the balance sheet this year, which would be a step towards a more dovish stance in the near-term.
Technical outlook
93.46 (13-month low that was set yesterday) could be seen as the first technical support. A break below that level could open the door towards 93 (psychological level/Jun. 23, 2016, low) and 92.50 (May 2, 2016, low). On the upside, resistances could be encountered at 94 (psychological level/daily static resistance), 95 (Jul. 20 high) and 95.60 (Jul. 14 high).
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
