US Dollar retreats after Fed’s decision

Greenback rose across the board immediately after the Federal Reserve left interest rates unchanged but it quickly reversed. USD not only erased gains but it turned lower in the market reaching fresh lows. The tone of the statement was in line with market expectations.

The US Dollar index, which gauges the US dollar against its main competitors, was steady hovering around 97.20 before the decision and then it jumped to 97.50, near weekly highs. But it reversed sharply and now is testing 1-week lows and a key short-term support located around 96.80.

The index bottomed at 96.76 after the FOMC meeting. The lowest level since last Wednesday and currently is at 96.83, down 0.35% for the day. Stocks in Wall Street turned to the upside after the statement but still remain below daily highs. The Dow Jones was up 0.20% and the Nasdaq 0.68%.

Levels to watch

A consolidation significantly below 96.80 could remove momentum from the US dollar, signaling more correction ahead, probably toward 96.40 (July 18 low). On the opposite direction, if it manages to hold above, Greenback could rise to test the next resistance located around 97.50/55.