The US dollar gained sharply on other currencies today after the European Central Bank made a surprisingly dovish policy statement. Yesterday, the currency had a mixed reaction to the hawkish statement from the Federal Reserve, rallying initially but falling afterwards. Yet Fed hawkishness is a bullish factor in the long and may be responsible to some degree for the currency’s rally today.
Yesterday, the Federal Open Market Committee left interest rates unchanged, surprising no one. What caught traders’ attention, though, were the updated economic projections. While all of them were better than the March forecast, market participants were particularly interested in the upgraded dot plot, which basically promised four rate hikes in total this year versus three promised by the FOMC previously.
As for today’s events, the main one was the European Central Bank policy statement, which turned out to be unexpectedly dovish. It drove the euro down, boosting the dollar at the same time. Thursday’s US macroeconomic reports were universally good, bolstering the greenback further.
EUR/USD sank from 1.1791 to 1.1616 as of 17:35 GMT today. GBP/USD declined from 1.3373 to 1.3296 after rallying to the high of 1.3446 earlier. USD/JPY edged up from 110.33 to 110.52 following the drop to the daily low of 109.92.
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US Dollar Surges After FOMC & ECB Meetings
