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EUR/USD pops after Fed leaves rates unchanged

FXStreet (Mumbai) - The EUR/USD pair spiked to 1.14 after the Federal Reserve held the interest rate unchanged at the record low of 0.25%.

USD drops as two-year treasury yield tanks

The USD is being offered across the board after the FOMC rate decision. The two-year yield, which mimics rate short-term interest rate expectations, fell sharply by more than six basis points to 0.742%; dragging the USD lower along with it.

The latest Fed interest rate ‘Dot chart’ now sees a single or no rate hike in 2015. The dot plots also showed one official advocating a lift-off in 2015.

EUR/USD Technical Levels

The spot currently trades around 1.1380. The immediate resistance is seen at 1.1436 (June 18 high), above which the spot could extend gains to 1.15 levels. On the other side, the support is seen at 1.13 and 1.1229 (200-DMA) levels.

Full text Fed statement September 17

Information received since the Federal Open Market Committee met in July suggests that economic activity is expanding at a moderate pace. Household spending and business fixed investment have been increasing moderately, and the housing sector has improved further; however, net exports have been soft. The labor market continued to improve, with solid job gains and declining unemployment. On balance, labor market indicators show that underutilization of labor resources has diminished since early this year. Inflation has continued to run below the Committee's longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation moved lower; survey-based measures of longer-term inflation expectations have remained stable.
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GBP/USD rallies to test 1.56 on "No Change" from Fed

GBP/USD has rally on the back of the Fed's decision to stay as they are while they monitor the labour market for further improvements and until they are reasonably confident that they are back on course to meet their 2% inflation target.
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