Last week’s Fed meeting left a rather big impact on financial markets. Bernanke somewhat fumbled the ball a few times and while the USD has rallied slightly for a few days, interest rates have been surging which continues to mortgage rates and could dampen the housing recovery which many have accredited with stronger equity markets together with QE.
While stronger interest rates and a potential QE exit act as positive factors for the USD, an overall weak economy will counter those impacts and a declining housing market may initiate much weaker economic data going forward which will pressure the Fed to remain committed to QE which will act negative on the USD.
It may be me, but it appears that the USD is doomed either way you look at it given the massive twin deficit which continues to grow as nobody cares about it until it is too late. The USD is the most government manipulated currency and those who believe Bernanke that the Fed is independent should really conduct a reality check. The good news is that Bernanke is essentially out as he got fired in a nice way; Janet Yellen next?