Well no surprise of the rate hike but as I guessed what moved the market was the Feds intention moving forward.
The dollar has sank to a one-month low, while some surprise hints on the chances of a rise in UK interest rates drove sterling higher as investors digested the fallout of a second rise in U.S. rates in three months.
Investors snapped up the greenback at the start of European trade, judging it looked cheap after sharp falls following the U.S. Federal Reserve’s failure to point aggressively to further rises in the official premium for holding the currency.
But the dollar struggled to make more progress through the European morning and waned as New York traders arrived at their desks.
The euro was also buoyed by a Dutch election defeat for far-right leader Geert Wilders which eased broader fears of a populist drift in European polls this year.
Yet the mood was still edgy and there was buying of the market’s favourite safe havens for capital. The Swiss franc gained almost half a percent against the euro while the yen inched back into positive territory, touching a more than two-week high.
We are long EURUSD but we need to keep a close eye on how best to manage the position. We will be looking at the Dollar Index for clues as to how much further upside potential Euro has.
The Dollar Index has found support at a key level however, the move down appears impulsive and has the potential for further weakness.
Remember a weak Dollar Index often means a strong EURUSD. The Dollar Index is a weighted basket of currencies with the Euro making up the largest percentage.