EUR/USD hits levels above 1.0900 and retreats; DXY drops sharply after FOMC decision
22.03.2023, 19:06

EUR/USD hits levels above 1.0900 and retreats; DXY drops sharply after FOMC decision

  • US Dollar collapses after the FOMC decision, DXY drops by more than 1%. 
  • Fed raises rates by 25 bps, as expected. 
  • EUR/USD rises a hundred pips, reaching the highest level since early February. 

The US Dollar is falling sharply on Wednesday following the Federal Reserve meeting. The EUR/USD has risen so far more than a hundred pips and printed monthly highs above 1.0900. 

As expected, the US central bank raised rates by 25 bps to 4.75% - 5.00%. In the statement, the Fed sounded dovish, suggesting no clear path of action for the future. 

During the press conference, Chair Powell said that tighter credit conditions can be seen as a substitute for interest rate hikes. “Disinflation is absolutely occurring”, he said. Regarding the “dot plot”, Powell explained that Fed’s officials do not see a rate cut for this year. 

US bonds soared after the FOMC meeting, pushing the US Dollar to the downside. Wall Street indices are moving between gains and losses, without a clear direction. Markets are not moving in sync. 

The weaker US Dollar is keeping EUR/USD around 1.0900, at the momentum. The pair peaked at 1.0911 and then pulled back to the 1.0860 area. It is rising for the fifth consecutive day. 

Powell speech: Isolated banking problems can threaten banking system if left unaddressed

Powell speech: Recent banking events will result in tighter credit conditions

Powell speech: Before banking stress, thought we would have to raise terminal rate

Powell speech: Tightening in credit conditions may mean monetary tightening has less work to do

Technical levels

 

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