The dollar got dumped across the board yesterday and it was a clear rout for the dollar despite the fact that the Fed did raise rates as expected by most of the markets. We had mentioned in our forecast yesterday that with the rate hike and some hawkishness in the statement already priced into the markets, it would be difficult to find out how hawkish is hawkish enough for the markets. And thats what we saw yesterday as the EURUSD rose from the low 1.0600s through 1.0700 and it trades comfortably above 1.0700 as of this writing.
EURUSD Shoots Up As Fed Disappoints
The Fed hiked rates yesterday, which was widely expected, but what was keenly watched was the statement and the press conference from the Fed Chief Yellen thereafter. The markets were expecting a hawkish statement with a clear guidance on when the next rate hike was going to be. But the statement and Yellen, later on in her conference, chose to keep the door open by saying that the next rate hike would be dependent on the incoming data and there was no specific timeline to the same.
The EURUSD got another shot in the arm early in the morning today as the Holland election results started pouring in with the ruling party winning a majority and the opposition, which were against the Euro as a concept, suffering a defeat, and this helped the euro to become even stronger during the course of the morning.
The dollar is set to suffer across the board in the short term due to the uncertainty on the timelines for the hike and this could push the EURUSD further towards 1.0800 which should be the top of the range for now. Looking ahead to today, we do not have any major news from the Eurozone but we have the manufacturing index and the unemployment claims data from the US later in the day. Expect the EURUSD pair to make a move towards 1.0800 during the course of the day.