Why USD Fell After FOMC Policy Decision Announced?

 The US dollar traded lower against most major currencies in the Asian session today after plunging following the FOMC policy announcement earlier this morning.

The Federal Reserve (Fed) kept interest rates unchanged at 0-0.25% and asset purchases of $ 120 billion, as widely expected by the market.

Preliminary market reactions initially showed the US dollar soaring higher following the announcement, but the king of the currency plunged back lower after being pushed down by Chairman Jerome Powell's statement.

Powell cautiously said that policymakers have discussed a reduction in asset purchases, yet still no decision has been made as to when it will be implemented.

In fact, policymakers will continue to watch for further progress being made in achieving inflation targets and central bank jobs. Referring to the millions of people who are still unemployed, Powell stressed that the economy is still far from making progress.

This shows, although the Fed is ready to make a reduction, but the central bank is in no hurry to do so given that there is still much progress to be achieved.

Meanwhile, Powell also reiterated that the recent rise in inflation was driven by temporary factors. While acknowledging that the hike was higher than expected but he was confident the price pressure would fade.

At the opening of the Asian session, the dollar index, which measures the strength of the greenback against a basket of major currencies, traded lower at 92.27.

Following the weakness of the greenback dollar, the euro rose to a two -week high, while the pound returned to trade above the 1.3900 price level.

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