The dollar index plunged to its lowest level
The Fed agreed to raise rates by 25 basis points
Powell admits that the process of disinflation has begun
The US dollar plunged after being surprised by the results and statements of the Federal Reserve (Fed) which turned dovish at its latest policy meeting.
As expected, the Fed raised interest rates by 25 basis points saying that inflation had started to decline (disinflation).
Investors saw the statement as a dovish signal even though the Fed said some rate hikes were still needed and a cut would not happen.
Against a basket of major currencies, the dollar index, which measures the strength of the greenback, slipped below the 101.00 price level in the Asian session, a 9-month low.
Meanwhile, the euro soared to its highest peak in almost 10 months at the price level of 1.1020, while the pound was higher at around the price of 1.2390 against the US dollar.
Investors' focus now shifts to the Bank of England (BOE) and European Central Bank (ECB) policy meetings that will take place in the New York session, where both are expected to raise rates by 50 basis points.
Looking at the reaction of commodity currencies, the Aussie dollar rocketed to its latest 8-month high while the New Zealand dollar traded at its strongest in 2 weeks against the USD.
Additionally, the Canadian dollar traded at its strongest level in 3 months against the greenback despite weak crude oil prices.
In addition, the Japanese yen also traded higher to a 2-week high against the US dollar.
