The Fed’s bold move was accompanied by a significant change in the Fed’s rate outlook. The USD weakened before reversing to trade unchanged towards Wednesday’s close. A clear push below 100.50/55 points to a drop towards the 99.00/50 zone in the near term and will signal more sustained weakness for the index over the medium term, notes Shaun Osborne, Chief FX Strategist at Scotiabank.
USD back on the defensive this morning
“Chairman Powell projected calm at yesterday’s press conference, suggesting that the bold cut was not a ‘catch-up’ move but rather a recalibration in response to developments in the labor market and inflation since the last meeting. Still, the prospect of a steady series of rate cuts in the US against slower progress in Europe will continue to put pressure on the USD from a medium-term standpoint.”
“The volatile market response to yesterday’s decision—the USD weakened before reversing to trade unchanged into Wednesday’s close—appears to be little more than after-the-fact position-squaring, with the USD returning to the defensive this morning.”
“Intraday price action for the USD looks rather soft and leaves the DXY testing support around the 100.50/55 zone again. A clear push below this point points to a drop towards the 99.00/50 zone in the near term and will signal more sustained weakness for the index in the medium term.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
