Judging by the market reaction to the FOMC meeting results, the Federal Reserve will raise the benchmark rate once in two meetings. Notably, last year, the key rate was hiked at every meeting. What is more, the US regulator may start cutting the key rate as early as this summer.
In fact, the situation is different. According to the official website of the Federal Reserve, where we can find all the comments, Jerome Powell did not say anything that might cause such a market reaction. The Fed Chair announced further monetary policy tightening. He also added that the key rate cut in the current year was not reasonable. Why is the US dollar activity losing value?
The decline could be explained by the meetings of the Bank of England and the European Central Bank. The Fed raised the benchmark rate by 25 basis points. In addition, Jerome Powell said that the regulator would raise the key rate at the same magnitude at least two times more. There is no doubt that the BoE and the ECB will hike interest rates by 50 basis points. Although the key interest rate in the US remains higher than in Europe, the difference will become smaller.
If the European regulators decide to tighten the monetary policy at the current pace, in the near future, interest rates in Europe will exceed the ones in the US. It is just a matter of time.
However, the European economic situation may force the central banks not only to slacken the key rate hike but to consider its lowering. Meanwhile, the Federal Reserve will tighten its monetary policy to solve the issue of the overheating labor market.
Against the backdrop, both European regulators may decide to slow down the key rate hike. This, in turn, will spur a reversal in the US dollar and its long-lasting rise.

Waiting for the publication of meeting results, we see that the euro/dollar pair increased, thus changing the market situation. At first, it reached a new local high of the uptrend and then, broke the psychological level of 1.1000. This could be defined as an inertial movement caused by high speculative activity.
Such sharp price changes in a short period of time led to an overbought signal in the short-term periods. That is why the pair may slacken and bounce.
Notably, the speculative activity will surge again at the moment of the publication of the ECB meeting results and the following press conference.
From a technical point of view, the price consolidation above 1.1000 may lead to a further rise in the euro.

Yesterday, the pound/dollar pair managed to rise by approximately 80 pips. However, this movement failed to cause considerable changes. The quote continued hovering within the sideways channel of 1.2300/1.2440.
Until the price breaks either limit of the range, it may bounce. From the technical point of view, this may lead to a decline in the volume of long positions near the area of 1.2400/1.2440.
The main strategy is still based on a breakout since only this will alter the market situation.
The downward movement will become possible if the price settles below 1.2300 on the four-hour chart. This may spur a formation of a full-scale correction.
Traders will consider the upward scenario if the price consolidates above 1.2450 on the four-hour chart. This action will point to the continuation of the upward cycle.



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00:00 INTRO
00:24 Jerome Powell
00:52 FED’S KEY INTEREST RATE
01:27 Euro, pound
01:59 The US dollar
02:13 EUR/USD
03:07 GBP/USD