Fed causes USD volatility

Source: Dukascopy Bank SA
On July 28, the US Federal Reserve made a rate statement and issues its Federal Open Market Committee Statement. In general, the Fed kept its interest rate unchanged and the bank continues its quantitative easing program.

Quoting the statement: "The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.

Last December, the Committee indicated that it would continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage‑backed securities by at least $40 billion per month until substantial further progress has been made toward its maximum employment and price stability goals. Since then, the economy has made progress toward these goals, and the Committee will continue to assess progress in coming meetings."

Monetary Policy Statement

Federal Reserve issues FOMC statement

Immediately after the release, the EUR/USD plummeted 41 base points. Namely, the rate dropped from 1.1814 to 1.1773. However, afterwards, a recovery started. In less than two hours after the drop, the currency exchange rate had recovered by 77 points and reached the resistance of the 1.1850 mark.

Initial Reaction

Larger scale situation

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Actual Topics

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