The USD strengthened after the Federal Reserve hiked rates by 25 bps and signalled that further rate hikes will be gradual. The Fed dots showed that the members expect the Fed Funds rate to stand at 1.4 % by the end of 2016 and that inflation will rise towards 2 % over the medium term. EUR/USD briefly rose above 1.10 immediately after the announcement, but eventually retraced all the gains and finished the day at 1.0910. In Asia, the pair extended losses and reached a low of 1.0830. Similar price action was seen in GBP/USD, which fell from 1.51 to 1.4920.
Meanwhile, USD/JPY took out the 122.20 resistance level and rallied to 122.60. The next key resistance level now lies at 123.20, followed by 123.60. The commodity currencies are little changed from yesterday's EU open. AUD/USD had another bounce off the 0.7160 level, while NZD/USD is consolidating around 0.6740.
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