The reaction of the US dollar following the FOMC policy decision was not as expected as the giant currency traded lower during the Asian session.
The Federal Reserve (Fed) met expectations by raising interest rates by 25 basis points to 0.50% and gave an indication that there will be 6 more hikes this year.
The US dollar initially surged higher following the decision with the yen plunging to its latest low since 2016. However, the king of the currency declined again soon after.
The stock market also rebounded after showing a decline, supported by Chairman Jerome Powell’s optimistic statement about expansion in the U.S. economy.
The depreciation exhibited by the US dollar may be due to investors who had placed earlier expectations on a rate hike by the Fed thus pushing the giant currency higher before the meeting took place.
Meanwhile, investors remain positive with the Ukraine-Russia agreement despite no real progress in peace talks from both sides.
The euro benefited from the USD's decline by modestly rising, supported by inflows of riskier assets amid positive market sentiment.
Investors ’next focus was on the Bank of England (BOE) policy meeting, which saw the pound traded rising from its lowest level since November 2020.
