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The Dollar Slightly Strengthened after the Fed Meeting
Yesterday’s Fed meeting unfolded as expected, with the base interest rate remaining at 4.50%. Jerome Powell, in his post-meeting press conference, provided no clear guidance on future monetary policy direction. Instead, he emphasized that the Fed would not be rushing to cut rates and underscored the need for concrete progress in reducing inflation before making any changes.
As a result of this outcome, the US dollar slightly strengthened against its major peers, further solidifying its recent bullish trend. The greenback’s upward momentum is expected to continue in the near term, driven by expectations that the Fed will not be adopting a dovish stance anytime soon.
In the currency market, the GBP/USD pairing tested key support at 1.2400 yesterday but managed to hold above this level for now. If positive news related to the pound emerges, the pair could potentially rise towards its recent highs at 1.2530-1.2500. However, a failure to break and consolidate above the aforementioned resistance may lead to a renewed decline towards 1.2320-1.2260.
On the other hand, the EUR/USD pairing fell short of expectations after the Fed’s decision, dropping below the critical 1.0400 mark before rebounding back up to 1.0440. Today is an important day for EUR/USD, as market participants eagerly await the ECB interest rate decision and potentially significant comments from Christine Lagarde regarding future monetary policy. Should investors perceive incoming data as favorable for the euro, the currency pair could attempt to reclaim lost ground and challenge its recent highs.
In conclusion, yesterday’s Fed meeting has instilled a sense of uncertainty in the market, with the dollar temporarily gaining strength due to the lack of clear direction from the central bank. It remains to be seen how this development will influence the overall trajectory of the currency market in the days ahead.
Source: fxopen.com
