The European currency manages to stay stronger today as the Federal Reserve’s rates announcement was dovish as expected; the dollar suffered the most with the announcement pulling it down farther. The dollar index was showing one of the lowest performances it has, while its euro counterpart hovers around the two-year high.
Euro’s Bullish Run
The Federal Reserve’s rate announcement pushes the euro to the $1.16 mark; this figure is just around the corners of the two-year high but the euro settles on the 23-month high
The Nordic bank, Danske Bank’s said that “Fundamentally, the euro is still undervalued against the dollar and we still see the case for a higher euro six to 12 months ahead,” and “We do not think there will be major changes to the Federal Reserve’s statement, although it is likely the probability is skewed towards a slightly more dovish tone given inflation has now been weaker than expected for four consecutive months.”
Euro Stocks Dips, Eases on Earlier Trading
On the other hand, the majority of European stocks were massively pressured by poor data and the surging euro. Some more factors that are pulling the stocks down are as follows; the airline sector’s continuous debacle and the dwindling exports figures were weighing them down.
London’s FTSE 100 was dipping on the 0.9% decrease lows on midday trading yesterday; the stock was massively affected on the price feud in the airline's sector. Although most of the losses were apprehended and prices eased today after Fed’s dovish outlook streak and rates announcements severely weighed down the dollar.
Fed Sends Dollar Down
The Federal Reserve conducts a two-day meeting that starts today and is heavily imposing that they are not going to change any interest rate as many forecasted. According to a recent poll, the market gave a lower than 50% expectations that the Fed will increase the interest rates before the year ends. The doubt and lack of hope for another rate hike this year severely affected the greenback, although another meeting is set to be conducted next Wednesday, a handful of analysts are saying that this can steady the policy.
Fed’s dovish outlook and the meeting has commenced putting the dollar into a barrage of lows; the currency is currently struggling to go out of the 13-month low against a basket of major currencies. The dollar index, this measures the currency’s strength against major currencies was down at the 93.79 levels on midday trading, just inches higher on Monday’s 93.65. This has been the weakest performance the dollar has put ever since the June of 2016.
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