Never miss a story from Peter Hanks

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Peter Hanks

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

FOMC Meeting Talking Points:

  • FOMC officials expectedly delivered no change to the 2.25% - 2.50% interest rate range
  • The US Dollar traded lower as market participants digested the monetary policy impact from the new Summary of Economic Projections
  • See the full DailyFX Webinar Calendar for upcoming strategy sessions following the FOMC meeting

US Dollar Dives After March FOMC Meeting Reveals Dovish Fed

The Federal Open Market Committee offered no change to the 2.25% - 2.50% interest rate range at March’s policy meeting, in line with market expectations. Despite the unsurprising rate announcement, the US Dollar (reflected by the DXY Dollar Basket) traded lower following a firmly dovish shift from the central bank.

Accompanied by the Fed’s decision to maintain the current rate range was new language in the FOMC’s March statement. The revisions reflect lower growth and inflation forecasts for the US economy with expected 2019 GDP dropping from 2.3% to 2.1%. Lowered forecasts were within market expectations, but the degree to which the Fed cut the economic outlook may have been more pessimistic than anticipated which likely contributed to the subsequent price action.

View our Economic Calendar for events scheduled later in the week like New Zealand GDP and a Bank of England rate decision.

In the statement, the Federal Reserve signaled no hikes in the interest rate range in 2019, with one hike likely in 2020. Further, FOMC officials announced the bank will taper balance-sheet roll off and may halt the process in late September. The decision to pause on interest rate hikes marks a concrete development in the central bank's policy and solidifies the bank's dovish stance. In response the US Dollar added to recent losses from days prior, plunging to 96.00 from 96.45 immediately after the announcement crossed the wires.

US Dollar Basket Price Chart (DXY): 1-Minute Time Frame (March 20) (Chart 1)

us dollar price chart fomc

US Dollar Basket Price Chart (DXY): Daily Time Frame (January 2018 - March 2019) (Chart 2)

us dollar price chart fed decision

On the broader Dollar chart, price action following the Fed’s policy decision sent the index through support from April around 96.25. Following the report’s release, Federal Reserve Chairman Jerome Powell will offer further insight into the Fed’s stance at a post-decision press conference. Volatility in USD crosses and US equity indices may continue as clarifying statements are made or unexpected comments are offered. In the meantime, get up to speed on themes to watch during Chairman Powell’s conference.

Check back for updates as the story develops…

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more: Dow Jones, S&P 500, FTSE 100 and DAX 30 Fundamental Forecast

DailyFX forecasts on a variety of currencies such as the US Dollar or the Euro are available from the DailyFX Trading Guides page. If you’re looking to improve your trading approach, check out Traits of Successful Traders. And if you’re looking for an introductory primer to the Forex market, check out our New to FX Guide.