Dollar stays on the backfoot to start the session

The dollar sold off after the FOMC meeting yesterday, as Fed chair Powell let the doves out to play. Policymakers also retained the dot plots view for this year, reflecting 75 bps worth of rate cuts. That was enough to trigger a straightforward reaction in markets in the aftermath.

In FX, the dollar fell across the board and that continued into Asia trading earlier today. But now, we’re seeing the dollar steady slightly as we look towards European trading. The greenback is little changed against the likes of the euro, yen, and pound as it recoups some of its earlier losses. It is mostly down against the commodity currencies only at the moment.

EUR/USD is up just 0.1% to 1.0927 as we await PMI data from Europe later in the day. Meanwhile, USD/JPY is trading near flat after a solid bounce from 150.60 in Asia to 151.20 currently. GBP/USD is also trading flat at 1.2785 after briefly testing the 1.2800 earlier in the day.

As for commodity currencies, they are largely benefitting from the stronger risk sentiment in play.

AUD/USD is up another 0.6% to 0.6625 as it runs back up to near the highs for the month now. The 50.0 Fib retracement level at 0.6656 will be a key technical test for buyers next.

Meanwhile, USD/CAD looks to have been rejected at 1.3600 again as it falls back down to 1.3470 on the day. The pair is slipping back below its 200-day moving average of 1.3483 and that will put sellers back in the driver’s seat.

Coming up, we have the SNB and BOE to deal with later today. Let’s see what that has to offer after the Fed yesterday.

This article was written by Justin Low at www.forexlive.com.