EUR/USD is currently trading at 1.1829 between a range of 1.1809 and 1.1882 so far following the Federal Reserve’s interest rate decision event.
The Fed has left the door open for further easing, but there have been no great shakes in the event.
The Fed appears to be on hold through to 2023 as 13 of 17 officials have forecasted as such.
FOMC statement says it would be prepared to adjust if risks emerge that would impede goals
The Fed is forecasting 2.0% inflation in 2023 and 4.0% unemployment.
2023 Fed fund dot plot shows four dots above zero, median unchanged.
We now await the presser from the Fed Chair Jerome Powell.
It would now appear that it is all going to be down to risk appetite and how well the world can cope with the spread of second waves of the virus through the flu season.
Hopes remain pinned on a COVID-19 vaccine.
The recent resilience of USD shorts in the CFTC data to swings in risk appetite is supporting the notion that the dollar bearish sentiment is becoming a structural component of FX markets.
For the month of September, we have seen the dollar attempt to rebound on a spot basis, but it has left no marks on the CFTC positioning data.
The EUR has retained its role as the most overbought currency in the G10 space and could be due for a healthy downside correction.
The DXY looks poised for an upside correction having completed a 38.”% Fibonacci retracement of its comeback impulse on the daily charts.
Next FOMC meeting is not until Nov 4-5, right after the election, so there is plenty of room for markets to move in what could be expected to be a very uncertain, this volatile path ahead.