USD: Broadly weaker as FOMC dust settles – Scotiabank
The bold move from the Fed was accompanied by a significant shift in the Fed’s rate outlook. The USD weakened before reversing to trade little changed into the close Wednesday. A clear push below 100.50/55 targets a drop to the 99.00/50 area in the short run and will point to more sustained index weakness in the medium term, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
USD back on the defensive this morning
“Chair Powell projected calm in yesterday’s press conference, suggesting the bold cut was not a ‘catch up’ move but rather recalibration in response to developments in the labour market and inflation since the last meeting. Still, the prospect of a steady string of rate cuts in the US versus slower progress in Europe will still drive pressure on the USD from a medium-term point of view.”
“The choppy market response to the decision yesterday—the USD weakened before reversing to trade little changed into the close Wednesday—looks like little more than position adjustment after the fact with the USD back on the defensive this morning.”
“Intraday price action for the USD looks quite soft and leaves the DXY pressuring support around the 100.50/55 area again. A clear push below this point targets a drop to the 99.00/50 area in the short run and will point to more sustained index weakness in the medium term.”
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