The dollar strengthened against most major currencies on Wednesday after investors digested the Federal Reserve’s statement on monetary policy and determined that despite dovish language, rates still remain on track to rise in 2015. The Federal Reserve said earlier it was leaving its benchmark interest rate unchanged at 0.00-0.25% and added it would likely close its monthly bond-buying program in October.
Prior to Wednesday’s policy statement, the Fed was buying $25 billion in Treasury debt and mortgage-backed securities a month to stimulate the economy, a monetary policy tool known as quantitative easing that aims to suppress long-term interest rates, weakening the dollar as a side effect.The Fed decided earlier to trim that figure to $15 billion and will likely close it at its Oct. 28-29 meeting, which gave the dollar support.
Intraday bias remains on the downside as 21 and 55 EMA trend indicators are crossed downward in the 1 hour charts, 4 hours, Daily and Weekly charts signalling a continuation of strong bearish trend in the pair. SSRC, Stochastic, RSI and MACD Oscillator indicators are showing bearish momentum is still intact, so am expecting further decline to 1.28060 supports (Weekly S2) in the medium term picture.
Later tomorrow evening Fed Yellen would be speaking, so be on the look out as this might provide volatility.