US Dollar Trades on Mixed Signal as Market Reels from Fed Rate Hike Announcement
Login

US Dollar Trades on Mixed Signal as Market Reels from Fed Rate Hike Announcement

Estimated Reading Time: 2 minutes

Azeez Mustapha

Updated:


The US dollar halted its descent in the Asian session on Thursday as the recently announced Federal Reserve interest rate hike rocked the financial markets.

Money markets anticipated the 75 basis points (bps) increase announced yesterday and had already priced in this possibility and several other rate hikes as inflation continues to swell. The greenback took an immediate downturn after Fed Chair Jerome Powell’s speech yesterday before finding a footing in the early Asian session.

The bearish reversal recorded today helped the single currency extend its gains against the euro as the EUR/USD pair etched closer to last month’s low at 1.0348. The dollar also received some support from US Treasury yields, which plummeted on Wednesday but regained an upward momentum today.

However, the dollar continued on its two-day slide against the Japanese yen as the policy differences between the US Fed and the Bank of Japan widened. Unlike the Federal Reserve, the BoJ remains resolute on maintaining an ultra-lose policy, pinning internet rates near zero. At press time, the USD/JPY trades at 132.80.

Against the Aussie, the greenback lost dominance after the AUD/USD fell to the 0.6850 low. However, the Australian dollar could not facilitate a bullish push above the 0.7025 mark, triggering a pullback in the early Asian session today.

US Dollar Index (DXY) Taps Twenty-Year High Near 106

Interestingly, the US dollar index (DXY) tapped a fresh multi-decade high yesterday at 105.79 but has dropped below the 104.60 level, at press time, following the ease off in the Asian session.

Analysts at Westpac explained: “The dollar index’s reversal along with rates after the Fed lifted rates 75 bp speaks to elevated short-term expectations more than anything else.” They added:

“It could ease back to the low-104s near term before the uptrend resumes. Chair Powell outlined a resolute path for taking Fed Funds to just shy of 4% by 2023, surely keeping risky assets unsettled for an extended period…the index can make a run at 107 in Q3.”

 

You can purchase Lucky Block here. Buy LBlock

  • Broker
  • Benefits
  • Min Deposit
  • Score
  • Visit Broker
  • Award-winning Cryptocurrency trading platform
  • $100 minimum deposit,
  • FCA & Cysec regulated
$100 Min Deposit
9.8
  • 20% welcome bonus of upto $10,000
  • Minimum deposit $100
  • Verify your account before the bonus is credited
$100 Min Deposit
9
  • Over 100 different financial products
  • Invest from as little as $10
  • Same-day withdrawal is possible
$250 Min Deposit
9.8
  • The Lowest Trading Costs
  • 50% Welcome Bonus
  • Award-winning 24 Hour Support
$50 Min Deposit
9
  • Fund Moneta Markets account with a minimum of $250
  • Opt in using the form to claim your 50% deposit bonus
$250 Min Deposit
9

Learn to Trade

Never Miss A Trade Again

step 1
Signal Notification

Real-time signal notifications whenever a signal is opened, closes or Updated

step 2
Get Alerts

Immediate alerts to your email and mobile phone.

step 3
Entry Price Levels

Entry price level for every signal Just choose one of our Top Brokers in the list above to get all this free.

Share with other traders!

telegram
Telegram
forex
Forex
crypto
Crypto
algo
Algo
news
News