The US Dollar sold off against a basket of major currencies after the Fed signaled no rate hikes through the end of the year.
The Fed’s dovish rhetoric has sent the greenback to a six-week low a level not seen since early February.
The US Federal reserve previously forecasted two rate hikes in 2019, but the central bank revised downward its expectation and now the funds rate project zero rate hikes in 2019.
The broad based dollar weakness was also motivated by the Fed’s downbeat economic assessment.
According to Fed’s projections, the US economy will slow down to 2.1% versus 2.3% forecast in December.
The outlook for inflation was also cut to 1.8% versus 1.9% previously forecasted which is below Fed’s 2% inflation target.
The outlook for the unemployment rate also suffered some alteration.
The Fed now sees the unemployment rate at 3.7% versus 3.5% forecasted in December.
Not only that most Fed’s officials see no rate hike in 2019 but they also only see one rate hike in 2020 which added more pressure to the dollar sell off.
The central bank’s dovish tone
The EUR/USD exchange rate was motivated to break higher above the intermediate swing high 1.1419.
We have now erased most of the losses experienced this year and we’re flat.
The yearly opening price stands at 1.1444 which is a key pivot point that needs to be conquered by the bulls.
From a technical perspective, the next major resistance level that traders need to keep an eye on is 1.1500.
This is also the middle of the previous trading range, which ads more confluence to it.
Elsewhere on other major currencies, the British Pound was the only currency that went south.
Despite the risks associated with Brexit the British Pound is the best performing major currency in 2019.
Year to date Sterling has gained 3.4% against the greenback.
During the Asia session the bulls mange to erase some of the early losses and we’re not trading at 1.3225.
The catalyst behind the recent sell off was motivated by the comments made by the European Council president Donald Tusk who suggested that a short extension is the only viable solution.
However, even this extension is conditional to PM May securing a victory for a Brexit deal in the UK parliament.
The UK government agreed to ask European Union just for a short extension of the Brexit deadline.
Currently the UK is set to leave the 28 nation bloc on 29 March but the new Brexit deadline was extended to June 30.
The upcoming risk event for the Pound is on Thursday when the Bank of England announces its interest rate decision.
In the cryptocurrency space, the top performer of the past five days is Bitcoin Cash having gained 20.35%.
The Bitcoin Cash rally can be sustained if we manage to get a daily break and close above the $195 figure.
Among the top cryptocurrencies the worst performer of the past five days is Bitcoin Gold having gained a modest 0.38%.
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