Change in FX vs USD Pre- and Post-Fed Announcement

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Change in FX vs USD Pre- and Post-Fed Announcement

Market expectations going into the FOMC meeting yesterday were anchored around a neutral to slightly dovish policy stance. But the removal of references to gradual rate increases, as well as indications that balance sheet reduction may be adjusted, took the market by surprise and risky assets broadly rallied. In this context of less restrictive US monetary policy and a risk-on sentiment, investors across the board sold US dollars, with the DXY index down and other currencies up between 0.3% and 1.6% against the USD. With one of the key supports to the greenback stepping back, will we see further dollar downside ahead?

Source: Unigestion, based on Bloomberg data as at 31.01.19.

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