The policy decision of the Federal Reserve Open Market Committee (FOMC) meeting became the main focus of the market today, after being given positive expectations from the Federal Reserve (Fed) at an earlier meeting.
At its June policy meeting, the Fed saw that interest rate hikes would happen faster than expected, which would be preceded by a reduction in their asset purchases.
Still, follow-up statements from Fed Chairman Jerome Powell in several testimonies before the Senate and House of Representatives, left investors wondering when the bond purchase cuts would be implemented.
At this meeting, analysts expect the Fed to continue to maintain current monetary policy, but will likely give hints of a reduction.
If the Fed says concern over the current increase in Covid infection cases following the spread of the Delta virus variant, and gives reasons for slowing the reduction, it will likely drive the U.S. dollar to decline.
Still, if the Fed ignores those concerns and speaks clearly about future cuts, the U.S. dollar has the potential to rise higher.
However, it should be noted that at a recent policy meeting, policymakers have discussed a reduction in bond purchases.
Powell had previously stated that the contagion of the Delta variant would complicate the recovery of the U.S. economy, so, it would not be surprising if he expressed similar concerns in his follow -up statement tomorrow.
At the beginning of the European session, the king of the US dollar traded more stable against its main rivals around the price of 92.55.
