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    Dovish Fed Keeps Driving the Dollar Down| KOL Forex Analysis• Dane Williams

    Abstract:A look at Wednesday’s FOMC statement and accompanying press conference. While the dovish US Federal Reserve is driving the US Dollar down, the promise of ongoing support in the form of economic stimulus, equally has equity markets pushing all-time highs.
    Dane

      Traders expecting Wednesday‘s FOMC meeting to reverse the dollar’s fortunes, received a rude awakening as a dovish policy statement continued to heap pressure on the USD.

      With the economy showing little sign of recovery from the devastating Covid-19 driven recession that we currently find ourselves within, the Fed left interest rates at near zero levels and vowed to continue “acting as appropriate to support the economy.”

      Jerome Powell also implored Congress to help stimulate the economy through supportive fiscal policy, but the ultrasensitive and divided US political landscape certainly doesnt help.

      There‘s no way today’s FOMC statement can be viewed any way but as a dovish message to markets, with the Feds intention to maintain highly accommodative policy for “as long as it takes.”

      Most likely were talking years here.

      The actual July FOMC statement was little changed from June, but did feature the following addition: “The path of the economy will depend significantly on the course of the virus.”

      The irony of the Fed speaking about there being no tradeoff between the US economy and public health on the same day that the countrys Covid-19 death toll ticked above 150,000, is not lost on me.

      A devastating milestone that looks nowhere near a top, with California, Texas and Florida all also reporting record numbers of daily deaths.

      “Even if the reopening goes well and many, many people go back to work, it is still going to take a fairly long time for parts of the economy that involve lots of people getting together in close proximity” said Powell in his accompanying, socially distanced, virtual press conference.

      “Those people are going to need support.”

      With markets becoming increasingly addicted to stimulus, we know support means free money and as you can see below, the markets reacted accordingly.

      The US Dollar Index (DXY) remains under pressure, reaching support not tested since 2018.

      DXY Daily:

    圖片.png

      While at the same time, we have the S&P 500 (SPX) continuing to push toward what seems like inevitable all-time highs.

      SPX Daily:

    圖片.png

      If you think that‘s highly irrational price action during a global pandemic which has seen millions left unemployed and requiring government handouts to put food on the table, you certainly wouldn’t be alone.

      However, this is the reality we live in and it‘s time to flick your thinking if you’re going to be trading these markets.

      Markets can remain irrational, longer than you can remain solvent.

      Dont ever forget that.

      Best of probabilities to you.

      ---

      [About the Author]

      Dane Williams is an experienced forex market analyst and trader with experience across forex, cryptocurrency, commodity, index and futures markets. With over 10 years in the game across multiple roles, Dane has worked as a market analyst for Australian forex broker Vantage FX, worked as a daily blogger with ForexLive and now hosts his own forex consulting service under the ForexBrokr brand.

      Dane‘s expertise as an analyst is primarily technical, focusing on teaching traders how to manage their risk around key support/resistance zones within the markets. Something he’ll be sharing with WikiFX subscribers twice weekly going forward.

    圖片.png

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    • South Korean Won
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    • New Zealand Dollar
    • Polish Zloty
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    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
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