The US dollar dropped across the board on Wednesday following a dovish monetary policy statement by the US Federal Reserve, which maintained its benchmark rate unchanged in the 2.25% 2.5% band and hinted to a more cautious approach to interest rate hikes.
Fed chairman Jerome Powell affirmed that the US economy remains growing at a healthy pace although he stated that the bank will be patient in lifting borrowing costs over the coming months, amid the growing risks to the economic outlook.
EUR/USD rallies to three-week highs above 1.1500. The euro appreciated for the fifth consecutive day on Wednesday to extend its recovery from last week’s lows at 1.1290 to levels right above 1.1500. As at London market opening times, the EUR/USD is trading at 1.1505.
GBP/USD: support at 1.3050. Sterling’s reversal from last week’s highs at 1.3220 area found support at 1.3050, and the pair bounced up on Wednesday after the Fed’s monetary policy meeting, to return to the mid-range of 1.3100. As at London market opening times, the GBP/USD is trading at 1.3140.
USD/JPY dives to two-week lows below 109.00. The US dollar broke below the lower band of the last two week’s trading range, at 109.00 weighed by the dovish Fed monetary policy meeting. As at London market opening times, the USD/JPY is trading at 108.65.
In the Calendar Today
Today in the Eurozone, Eurostat will release the Preliminary Gross Domestic Product figures for the fourth quarter. Economic growth is expected to have slowed down to 1.2%, from 1.6% in the previous quarter, which might increase bearish pressure on the euro.
10:00 GMT EZ: Gross Domestic Product – Prelim. (YoY) (Q4)
Previous: 1.6% Consensus: 1.2%