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Greenback Extends Weakness Following FOMC Decision

FOREX
  • A dovishly perceived hike from the Federal Reserve was enough to build the momentum for a weaker dollar on Wednesday, with the USD index (-0.85%) extending to the lowest level since February 03.
  • With the Fed statement and the latest summary of economic projections leaning dovish, the greenback came under immediate pressure, from which it did not recover.
  • EURUSD is the strongest performing major in G10, currently up 1.02% as we approach the APAC crossover. An immediate spike above the 1.08 handle sparked a wave of demand that saw the pair trade as high as 1.0912.
  • This closely tied with noted resistance at 1.0911, the 76.4% retracement of the Feb 2 - Mar 15 bear leg, holding well during the press conference with Powell’s reiteration that the Fed are prepared to hike above expectations then aiding the brief bounce for the greenback.
  • However, after dipping to 1.0853, EURUSD continues to trade buoyantly and is approaching the 1.09 handle once more. Further greenback weakness overnight will pave the way for a move to 1.1033, the Feb 2 high and key resistance for the pair.
  • The initial bounce in equities saw the likes of AUD and NZD extend gains well over 1% on the session. However, with major indices sliding back into the red, Antipodean FX surrendered a portion of these gains into the close. USDJPY (-0.96%) is also trading heavily as we approach the end of the US session, narrowing the gap with the week's lows at 130.54.
  • More central bank fun on Thursday as the SNB and Norges Bank kick proceedings off. Focus then turns to the Bank of England, who is widely expected to hike rates after the above expectation CPI data earlier today.
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