European session review: USD weakens as Fed reaffirms dovish policy stance

USD depreciated against other major currencies in the European session on Thursday, as investors continued to digest the  U.S. Federal Reserve’s latest policy statement. 

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, fell 0.33% to 92.02.

At the latest meeting, the Fed’s officials did not make any changes to the central bank’s policy stance, as widely expected, leaving the target range for the fed funds rate near zero and the pace of asset purchases at $120 billion per month.

In their policy statement, the policymakers acknowledged that the U.S. “economy has made progress” towards the Fed’s maximum employment and price stability goals, indicating that changes to the central bank’s stimulus could be coming. But the Fed’s Chair Jerome Powell said there's still some time until “substantial further progress” has been made towards the Fed's employment goal. He also added that the timing of any change in the pace of our asset purchases will depend on the incoming data and the Fed will provide advance notice before any change. Market participants interpreted these remarks as a signal that the Federal Reserve is to remain accommodative and to continue to monitor the incoming data, presumably at least a few more jobs reports, until it decides to begin tapering asset purchases.