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Dollar Remains Soft after the FOMC Decision

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The almighty U.S. dollar, the world’s most liquid currency, was nursing wounds during the Asian trade session today. Overnight the U.S. Federal Reserve left monetary policy and its Fed Funds Rate (FFR) unchanged, as expected.

However, during commentary, the Federal Reserve made dovish signals regarding interest rate levels that will remain low until inflation reaches their two percent target. This pushed the U.S currency lower along with Treasury yields.

During the Asian session, the dollar licked its wounds after seeing its largest losses in weeks overnight. The Fed’s inflation outlook poured cold water on any rate hike on the near to medium term horizon.

Safe haven currencies like the Japanese yen and Swiss franc saw capital inflows as traders are worrying about the status of trade talks between China and the United States.

Also on the calendar for today, are the general elections in the United Kingdom and the European Central Bank monetary policy decision.

The EUR/USD currency exchange rate hit a monthly high after the FOMC decision and was trading near 1.1133 this morning.

The dollar index, which measures the greenback against six other currencies, did nudge higher but remains weak at 97.413.

Forex Traders wait on Global Central Banks, UK Elections as the Dollar Remains Soft

There are a number of key events to monitor later today. The European Central Bank and Swiss National Bank will be announcing monetary policy and rate decisions.

The United Kingdom is heading to the polls for their general election. The economic calendar out of the United States will see both the core and headline producer price index (PPI) data crossing the wires.

The Swiss central bank should also leave monetary policy settings alone today. Traders will also listen to commentary from SNB Chair Chairman Thomas Jordan and what he has to say about the quarterly economic forecast. Jordan has previously said that the SNB will intervene if necessary.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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