Session recap: Mixed feelings post FOMC

By FXstreet.com | June 18, 2014 AAA

FXStreet (Guatemala) - The session was dominated by the Fed and FOMC that gave us a review of Fed members out look for the economy and future interest rates. The Board of Governors of the Federal Reserve made its decision this month to leave rates at 0.25% as widely expected. They will continue to taper at $10B to $35B from $45B also as expected.

There were changes in the Unemployment rate that suggest the Fed are optimistic looking forward. However, the GDP forecast for 2014 was revised down to 2.1 / 2.3 but there were no changes in 2015 or 2016. Currencies reacted differently initially to the dollar, but have settled broadly higher against the greenback as the market digested the details and Yellen’s comments as relatively dovish and bearish for the greenback.

EUR/USD was lacklustre in it’s making of advancements in the dollar compared to other currencies, painting a bearish outlook for the pair. The initial spike up to test 1.36 was short-lived directly after the announcement but it has since re-gathered itself back onto the bid post a choppy market and is attempting the handle yet again.

GBP/USD was also indecisive around the releases until the news was digested and the greenback was dumped in a dovish backdrop from the Fed. The pair tested 1.6920 and then penetrated the 1.70 handle to make a high of 1.7002 before easing back into threatening territory of 1.6990.

USD/JPY marked a high of 102.37 before plummeting through the 102 handle but slowing up in 101.90. Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart indicators lost upward strength but remain above their midlines, putting the pressure to the downside but not yet confirmed. “Further slides below 101.60/70 area are required to see a leg lower towards 101.20/30 price zone, in route to this year lows around 100.70”.

Key Events

Fed reduces QE by $10B to $35B as expected

Fed leaves Rates on hold for considerable period of time

US current account deficit rises

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