Dollar Pulls Back Across Forex Board After Jittery Traders React to Fed Decision

Key points:

US dollar retreats in forex markets. Fed holds rates steady at 5.5%. Jobs data coming tomorrow.

Illustration by TradingView

Fed chair Jay Powell rattled markets once again but also lifted hopes by saying that no rate hike is on the table.

The dollar index DXY seesawed on Wednesday as markets were reacting to the live press conference by Jay Powell. Following a rate hold by the FOMC, the Federal Reserve boss discussed the state of the US economy and the way forward. Markets initially didn’t like it. Then liked it. But then again didn’t. And, as it appears, they’re still uncertain what to make of yesterday’s talk. The Fed kept rates unchanged at 5.5% and cautioned that the fight against inflation was far from over. What’s more, Fed policymakers noted that no progress has been made toward stamping out stubborn price growth in recent months. For that reason, the US central bank will continue to monitor incoming data and decide whether or not to cut rates or keep them at a 24-year high. The good news — no rate hike is on the table, Fed chair Powell said in his speech. But the mixed bag of news and expectations left forex traders scrambling and struggling to make sense. Dollar bulls retreated across the forex board. The greenback’s index tumbled early on Thursday, diving below 106.00 to a session low of 105.44. On Friday, a fresh pack of updates will stir up markets with jobs data headlining the news flow.

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