U.S. Dollar Whipsawed On FOMC

Dear Traders,

Yesterday was none of our favorite trading days with the U.S. dollar showing a whipsaw performance after the FOMC statement failed to provide clear signals on potential tightening in June. One man’s joy is another man’s sorrow: The market’s response to the central bank’s statement has probably been the most positive scenario for the Fed, as policy makers want to avoid overreactions in the price development. For traders, however, it was rather a struggle against choppy swings and fake-outs. We therefore suffered losses instead of benefiting from the volatile fluctuations.

The statement came in somewhat more hawkish, showing that policy makers are less concerned about global risks but it did not provide any hints for a rate hike in June. The greenback whipsawed in response on the unconvincing statement. With still more than six weeks to go before the next Fed meeting in June the focus in the near-term will be on inflation and labor market data from the U.S.

Today, we have the German Unemployment report scheduled for release at 7:55 UTC, followed by the German Consumer Price at 12:00 UTC. If data disappoint the euro could weaken.

Furthermore, the U.S. first-quarter GDP report is due for release at 12:30 UTC and in case of any surprises, the USD may react strongly.

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