The Federal Reserve kept rates unchanged, as expected. However, the statement was perceived as more hawkish than expected, as the central bank downplayed weakness in the first-quarter economic growth. This is a hint that a rate hike in June seems quite likely.
The Dollar appreciated post-FOMC, especially against the emerging market currencies. Amongst the major pairs, the commodity currencies felt most of the pressure. AUD/USD fell from 0.7470 to a low of 0.74 in Asia. Further losses to at least 0.73 seem likely in the near-term. Similar price action was seen in NZD/USD, which reversed at 0.6970 yesterday and fell to a low of 0.6870 after the FOMC.
The reaction in EUR and GBP was rather mild. EUR/USD only declined to 1.0880, and then continued with its consolidation. Meanwhile, USD/JPY caught up on momentum. The pair rallied to 112.90 in Asia. A clear break above 113 would suggest that a rally towards 115 could follow.