The US Dollar weakened after a rather dovish FOMC. Fed Chair Yellen said that the economy was likely strong enough to support an increase in interest rates this year, but the central bank also lowered its economic and federal funds rate forecasts. Looking at the dot charts the Fed releases, Yellen now expects only one rate hike this year vs. two rate increases previously. The FOMC made it clear once again that they are data-dependent. A rate hike in September is certainly possible, but far away from being certain.
USD bulls were hoping for some hawkish messages from the Fed that could spark further momentum in the currency's uptrend, but Yellen failed to deliver, so there was broad USD selling after the press conference was over. EUR/USD is slowly approaching the 1.14 level. There is talk of option-related supply ahead of the level, but it is unlikely to be a major obstacle. GBP/USD is very well bid after decent UK econ data in the past few weeks and there is no major resistance until 1.60 now. USD/JPY under pressure and a move towards 122.00 seems likely in the near-term.
Meanwhile, commodity currencies are not benefiting much from the USD weakness. NZD/USD declined sharply after weak GDP data, which dragged the Aussie Dollar lower as well.
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