Forex News
- The Fed held the federal funds rate at 3.50% to 3.75% in the most divided FOMC vote since October 1992.
- Powell said the energy surge had not peaked and wanted to see energy and tariffs end before any rate cuts.
- Powell flagged that the easing bias could be dropped as soon as the next meeting, weighing on equities.
DJIA futures dropped close to 0.7% on Wednesday, falling from a session high near 49,250 to a fresh session low around 48,700 during Powell's press conference before staging a sharp final-hour recovery that returned price to trade close to 48,790. The day showed steady selling through the FOMC decision and into the press conference, with the late-session bounce off the lows recouping roughly a third of the day's decline as buyers stepped in around the 48,700 area.
The Federal Reserve (Fed) held the federal funds rate at 3.50% to 3.75% for a third consecutive meeting, hardening its inflation language to 'elevated' from 'somewhat elevated' while citing higher global energy prices and a high level of uncertainty around Middle East developments. The 8-4 Federal Open Market Committee (FOMC) vote drew the most dissents since October 1992: Stephen Miran preferred a 25-basis-point cut, while Beth Hammack, Neel Kashkari, and Lorie Logan voted to hold but opposed the easing bias inserted into the statement. In the press conference, Chair Powell described the decision as 'a closer call than in March,' said the energy price surge had not yet peaked, and noted that the number of officials seeing a hike as likely as a cut had moved up.
Powell added that a shift away from the easing bias could come as early as the next meeting and that he wanted to see energy and tariff pressures end before any rate cuts, hawkish-tilted remarks that pushed the US Dollar to fresh highs and pressured equities into fresh session lows before a relief rally trimmed the day's decline into the close.
Dow Jones 5-minute chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- The Fed held the federal funds rate at 3.50% to 3.75% in the most divided FOMC vote since October 1992.
- Powell said the energy surge had not yet peaked and wanted to see energy and tariffs end before cuts.
- Powell flagged that the easing bias could be dropped as early as the next meeting, supporting the US Dollar.
USD/CAD finished broadly unchanged on Wednesday, slipping less than 0.1% to trade close to 1.3688 after a volatile post-FOMC session. Price first spiked to a session high near 1.3711 ahead of the Fed's rate decision before sellers progressively reclaimed the move, with a session low about 1.3668 reached during the second half of Powell's press conference; a partial recovery in the final hour returned the pair to roughly 1.3690 by the close, leaving it in the upper portion of a wide intraday range.
The Federal Reserve (Fed) held the federal funds rate at 3.50% to 3.75% for a third consecutive meeting, hardening its inflation language to 'elevated' from 'somewhat elevated' while citing higher global energy prices and a high level of uncertainty around Middle East developments. The 8-4 Federal Open Market Committee (FOMC) vote drew the most dissents since October 1992, with Stephen Miran preferring a 25 basis points cut and Beth Hammack, Neel Kashkari, and Lorie Logan opposing the easing bias inserted into the statement. Chair Powell described the decision as 'a closer call than in March,' said the energy price surge had not yet peaked, and noted that the number of officials seeing a hike as likely as a cut had moved up. Powell added that a shift away from the easing bias could come as early as the next meeting and that he wanted to see energy and tariff pressures end before any rate cuts, lifting the US Dollar broadly even as the post-decision USD/CAD spike was fully retraced before a modest late-session bid returned price toward the middle of the day's range.
USD/CAD 5-minute chart
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
- The Fed held the federal funds rate at 3.50% to 3.75% in the most divided FOMC vote since October 1992.
- Powell said the energy surge had not yet peaked and wanted to see energy and tariffs end before cuts.
- Powell flagged that the easing bias could be removed as early as the next meeting, lifting the US Dollar.
XAU/USD declined around 1.6% on Wednesday, falling from a session high near 4,610 to a session low about 4,510 around the FOMC decision, then recovering to roughly 4,565 during Powell's press conference before slipping back to retest the 4,520 area and currently trading close to 4,534. The session showed a steady series of lower highs and lower lows into the rate decision, with the late-session price action carving a tentative basing pattern in a 4,520 to 4,560 corridor as the post-Powell bounce gave way to a second leg of selling.
The Federal Reserve (Fed) held the federal funds rate at 3.50% to 3.75% for a third consecutive meeting, sharpening its inflation language to 'elevated' from 'somewhat elevated' while citing higher global energy prices and a high level of uncertainty around Middle East developments. The 8-4 Federal Open Market Committee (FOMC) vote drew the most dissents since October 1992: Stephen Miran preferred a 25 basis points cut, while Beth Hammack, Neel Kashkari, and Lorie Logan voted to hold but opposed the easing bias added to the statement. Chair Powell described the decision as 'a closer call than in March,' said the energy price surge had not yet peaked, and noted that the number of officials seeing a hike as likely as a cut had moved up. Powell added that a shift away from the easing bias could come as early as the next meeting and that he wanted to see energy and tariff pressures end before any rate cuts, hawkish-tilted comments that lifted the US Dollar broadly and capped gold's intraday recovery into the close.
XAU/USD 5-minute chart
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- The Fed held the federal funds rate at 3.50% to 3.75% in the most divided FOMC vote since October 1992.
- Powell said the energy surge had not yet peaked and wanted to see energy and tariffs end before any cuts.
- Powell flagged that a shift away from the easing bias could come as early as the next meeting.
DXY climbed about 0.4% on Wednesday, rising from a session low near 98.57 to push above 99.00 intraday and peak close to 99.05 during Chair Powell's press conference before drifting back to trade about 98.98 in the closing hour. The advance unfolded as a steady stairstep through the European and US sessions, with a fresh leg up on the FOMC decision and a further extension on Powell's remarks, though a small portion of those gains was pared into the close as price stalled below the 99.05 peak.
The Federal Reserve (Fed) held the federal funds rate at 3.50% to 3.75% for a third consecutive meeting, hardening its inflation language to 'elevated' from 'somewhat elevated' while citing higher global energy prices and a high level of uncertainty around Middle East developments. The 8-4 Federal Open Market Committee (FOMC) vote drew the most dissents since October 1992: Stephen Miran preferred a 25 basis points cut, while Beth Hammack, Neel Kashkari, and Lorie Logan voted to hold but opposed the easing bias inserted into the statement. In the press conference, Chair Powell described the decision as 'a closer call than in March,' said the energy price surge had not yet peaked, and noted that the number of officials seeing a hike as likely as a cut had moved up. Powell added that a shift away from the easing bias could come as early as the next meeting and that he wanted to see the end of energy and tariff pressures before considering rate cuts, hawkish-tilted remarks that drove the US Dollar to fresh session highs above 99.00 before a modest fade into the close.
DXY 5-minute chart
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
The Federal Reserve (Fed) left its policy rate unchanged at 3.50% to 3.75%, a widely expected move, but the underlying message was far from straightforward.
On the surface, the statement kept a balanced tone, pointing to solid economic activity, a resilient consumer, and a labour market that is cooling but not deteriorating sharply. At the same time, inflation was described as “elevated”, a subtle but meaningful upgrade, with rising energy prices once again in focus.
But the real story sat beneath the headlines. The decision saw an unusually large split, with policymakers divided not only on the rate outlook but also on how to frame guidance. That internal tension became even clearer during the press conference.
When Jerome Powell spoke to reporters, he aimed for a delicate balance between noting that inflation risks still exist and wanting to keep all options open on policy. Energy prices featured prominently, with Powell warning that the recent surge has not yet peaked and will continue to push up inflation in the near term. He also flagged rising short-term inflation expectations and admitted that the risk of higher core inflation is real.
That said, this was not a central bank preparing to tighten: Powell made it clear that no one on the Committee is currently calling for a rate hike, and emphasised that policy is already sitting at the high end of neutral, if not slightly restrictive. Instead, the focus was on timing, with the Fed wanting to see clearer evidence that the effects of energy and tariffs are fading before even considering rate cuts.
The message on policy direction was deliberately two-sided after Powell stressed that the Fed is in a position to move in either direction if needed, but equally underscored that there is no preset course. What happens over the next 30 to 60 days, particularly around energy prices and inflation dynamics, could prove decisive.
All in all
This was a Fed firmly in wait-and-see mode but with a clear signal that the bar for easing has risen. Inflation risks, especially those linked to energy and expectations, remain front and centre, while the labour market is softening only gradually.
For markets, that means rate cuts are likely to stay pushed further out, even as the Fed keeps the door open, at least in theory, to move in either direction.
At the post-meeting press conference, Jerome Powell outlined the reasoning behind the decision to leave interest rates unchanged after the March meeting and fielded questions from reporters on the outcome.
Powell's press conference highlights
Inflation remains elevated, in part reflecting increases in energy prices.
The current policy stance is appropriate and is promoting progress towards our goals.
Developments in the Middle East are contributing to uncertainty.
We remain attentive to risks on both sides of our mandate.
Consumer spending remains resilient.
The unemployment rate has changed little.
Slower job growth reflects slower labour force growth.
Labour demand has also softened clearly.
We see PCE inflation at 3.5% in March, with core PCE at 3.2%.
Near-term inflation expectations have risen, while longer-term expectations remain consistent with 2%.
The economic outlook remains highly uncertain.
Higher energy prices will push up inflation in the near term.
Policy is not on a preset course.
We have been working on the hypothesis that tariffs would be a one-time price effect, and expect that to play out over the next two quarters.
We are already looking through the tariff shock, but will be cautious about energy.
We will want to see the downside of energy and tariffs before even thinking about reducing rates.
The energy surge has not yet peaked.
There was a vigorous debate about guidance today.
The number of officials who would support a move away from an easing bias has increased.
The majority of the Committee did not want to change the language at this meeting.
What happens in the next 30 to 60 days could change things.
This decision was a closer call than in March.
Prospects of a rise in core inflation are real.
Policy is in a very good place to wait and see.
We are now at the high end of neutral, slightly restrictive.
We think the policy rate is in a good place.
If we need to hike, we will signal and do so.
If we need to cut, we will also signal that.
We are in a good place to move in either direction.
No one is calling for a rate hike now.
This cycle is a much closer question when it comes to changing guidance.
We are very aware that people are experiencing higher gasoline prices.
We cannot know the neutral rate with certainty.
We are closer to neutral, at the higher end of the range.
There is no case for policy looking meaningfully restrictive.
Gasoline prices will depend on how long the Strait remains closed.
It remains a question whether spending will decline to offset the inflationary effects.
This section below was published at 12:00 GMT to cover the Federal Reserve's policy decisions and the immediate market reaction.
At its April meeting, the Federal Reserve (Fed) kept its Fed Funds Target Range (FFTR) unchanged at 3.50%–3.75%, right in line with what markets were expecting.
Highlights from the FOMC statement
The Committee decided to leave the target range for the federal funds rate unchanged at 3.50% to 3.75%.
Recent indicators suggest that economic activity has been expanding at a solid pace.
Job gains have remained low on average, and the unemployment rate has been little changed.
Inflation remains elevated, with global energy prices cited as a contributing factor.
The Committee is attentive to risks to both sides of its dual mandate.
Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook.
In considering the extent and timing of additional adjustments to the policy rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.
The decision was passed by a vote of 8–4. One member dissented in favour of a rate cut, while three dissented against the inclusion of an easing bias.
Bottom line
The Federal Reserve is holding steady, but the consensus is clearly fracturing. Inflation concerns, particularly linked to energy, are keeping the bar for cuts high, even as some policymakers push in that direction.
This is a Fed in wait-and-see mode but with growing internal tension — and that’s likely to keep markets on edge.
Market reaction to Fed policy announcements
The US Dollar keeps pushing higher on Wednesday, advancing for the second day in a row and approaching the 99.00 region when gauged by the US Dollar Index (DXY). The move higher in the buck also appears reinforced by a decent bounce in US Treasury yields across various maturity frames.
This section below was published at 16:30 GMT as a preview of the Federal Reserve's policy announcements.
- The US Federal Reserve is expected to leave the policy rate unchanged for the third consecutive meeting in April.
- The economic uncertainty created by the Middle East crisis clouds the Fed’s policy outlook.
- Fed Chair Powell’s comments could ramp up USD volatility as markets see a strong chance of the bank maintaining the status quo by end-2026.
The United States (US) Federal Reserve (Fed) announces its interest rate decision on Wednesday, another pivotal meeting for markets to gauge the stance of policymakers as energy prices remain uncomfortably high amid ongoing uncertainty in the Middle East, putting the Fed’s dual mandate under strain.
Markets widely expect the Federal Open Market Committee (FOMC) to keep interest rates unchanged in the range of 3.5%-3.75% for the third consecutive meeting in April.
As this decision is fully priced in, Fed Chair Jerome Powell’s comments in his last post-meeting press conference, given his term ends in over two weeks, could offer key clues on the policy outlook and drive the US Dollar’s (USD) performance.
Republican Senator Thom Tillis, who took a stance to block any Fed Chair nominee while the probe into Jerome Powell remained open, announced that he is prepared to move on with the confirmation of Kevin Warsh after the Department of Justice dropped the investigation on Friday. Warsh is now widely expected to become the US central bank’s new chair from May 15, when Powell’s current term ends.
The CME FedWatch Tool shows that investors see little to no chance of a rate cut at least until September, while pricing in about an 80% probability that interest rates will remain where they currently are by end-2026. Earlier in the year, there were strong expectations of multiple interest rate reductions, but surging Oil prices and the potential impact on global inflation caused investors to reassess their outlooks.
The revised Summary of Economic Projections (SEP) published in March showed that policymakers’ median projection pointed to a 25 basis points (bps) cut this year, unchanged from the SEP published in December 2025. However, the minutes of the March meeting highlighted that many participants saw risk of inflation remaining elevated for longer than expected amid persistent Oil price increase, which could even call for rate hikes.
TD Securities analysts note they expect the Fed policy rate to remain unchanged in April. “The labor market remains balanced, while headline inflation has ticked up owing to the oil shock. With uncertainty still high, the Committee will likely reiterate patience. Powell is likely to stay neutral on policy and avoid new comments on succession, despite this being originally slated as his final meeting,” they explain.
When will the Fed announce its interest rate decision and how could it affect EUR/USD?
The Fed is scheduled to announce its interest rate decision and publish the monetary policy statement at 18:00 GMT. This will be followed by Fed Chair Jerome Powell's press conference starting at 18:30 GMT.
The rate decision itself is unlikely to trigger a significant market reaction, but investors will scrutinize Fed Chair Powell’s remarks.
Powell is likely to reiterate that they need more time and data to assess whether high inflation will persist. Until now, Powell has refrained from hinting at a potential rate hike. In case he notes that option could be on the table in future meetings if the Middle East conflict prolongs and keeps Oil prices elevated, the immediate market reaction could help the USD gather strength against its rivals.
Although markets remain cautiously optimistic about a permanent truce between the US and Iran, the ongoing blockade of Iranian ports by the US military and Tehran’s reluctance to progress with negotiations until the blockade is removed don’t allow Oil prices to return to pre-war levels. The barrel of West Texas Intermediate (WTI), which was trading at around $65 before the US and Israel attacked Iran on February 28, seems to have settled above $90.
Conversely, market participants could start pricing in a September rate cut if Powell notes that the Fed will need to tilt its focus back to supporting the labor market once the situation in the Middle East is resolved. Investors could also assess Powell’s tone as being dovish if he pushes back against policy-tightening expectations and sounds optimistic about inflation quickly softening again, driven by a correction in Oil prices. In this scenario, the USD could come under selling pressure and pave the way for a bullish action in EUR/USD in the near term.
“We expect Fed Chair Powell to reiterate that the Fed’s current policy stance is appropriate, implying a high bar to resume easing. Watch out to see if Powell confirms any discussion on the next move being a hike,” BBH analysts note.
“Remember, the FOMC March meeting minutes highlighted that ‘many’ participants would favor rate increases to help bring inflation down to the 2% target in case of a lengthy war,” they further highlight.
Eren Sengezer, European Session Lead Analyst at FXStreet, provides a short-term technical outlook for EUR/USD:
“The technical outlook points to a lack of bullish momentum in the short term. EUR/USD trades slightly above the mid-line of Bollinger Bands and holds above the 100-day and the 200-day Simple Moving Averages (SMA). Additionally, the Relative Strength Index (RSI) indicator on the daily chart moves sideways slightly above 50.”
“On the upside, 1.1800 (Fibonacci 61.8% retracement of the February-April downtrend) aligns as the next resistance level before 1.1870 (upper Bollinger Band) and 1.1900-1.1910 (round level, Fibonacci 78.6% retracement). In case the pair drops below the 1.1700-1.1680 region, where the 100-day and the 200-day SMAs align, and settles there, technical sellers could show interest. In this case, the next important support level could be spotted at 1.1560 (Fibonacci 23.6% retracement) before 1.1500 (static level, round level).”
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
- AUD/USD slid as Fed held rates and Powell backed staying on board.
- Fed statement flagged resilient growth and elevated Iran-linked energy inflation.
- Split vote underscored policy divisions over easing bias and rate cuts.
AUD/USD drops towards 0.7100 on Wednesday, down some 1%, as the Federal Reserve (Fed) held rates unchanged and Fed Chair Jerome Powell hints that, once his term as chief ends, he will remain on the Fed’s board.
Aussie slides as Fed split and Powell remarks lift USD demand
At his press conference, Jerome Powell congratulated Kevin Warsh on hurdling the first stage on his path to becoming his successor as Fed Chair and clarified that he will remain as Governor until the criminal investigation against him concludes. He added that, as Governor, he “will keep a low profile” and that he will stay at the Fed after May 15, when his eight-year term as the US central bank's chief ends.
Regarding the monetary policy statement, the Fed stated that the US economy remains resilient, that the unemployment rate “has been little changed in recent months,” and that inflation is elevated, driven by higher energy prices linked to the Iran conflict.
The Fed noted that recent events in the Middle East are adding to economic uncertainty and stressed that policymakers will continue to weigh both parts of their dual mandate.
The vote on the decision was split 8–4. Governor Stephen Miran dissented in favor of lowering rates, while Beth Hammack, Neel Kashkari, and Lorie Logan opposed including an easing bias in the statement.
AUD/USD reaction to Jerome Powell’s statement to stay at the Fed
The AUD/USD pair extended its losses from around 0.7120, breaking below 0.7110, with eyes on the psychological 0.7100 figure. A breach of the latter will expose the 50-day SMA at 0.7056. If cleared, the next stop would be 0.7000.
Australian Dollar FAQs
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
- GBP/USD stays negative as the Fed holds rates steady amid Iran uncertainty.
- Split FOMC vote highlights divisions over easing bias in policy statement.
- Traders now await Powell’s final presser for fresh Dollar direction.
GBP/USD maintains its negative intraday trend on Wednesday, remaining steady following the Federal Reserve’s (Fed) decision to keep interest rates unchanged at Jerome Powell’s final meeting as Fed Chair. As of this writing, the currency pair is trading near 1.3480, down 0.30%, as market participants await insights from Powell’s forthcoming press conference.
Summary of the Fed’s statement
At his press conference, Jerome Powell congratulated Kevin Warsh as he hurdled the first stage on his path to becoming his successor as Fed Chair and clarified that he will remain as Governor until the criminal investigation against him concludes. He added that, as Governor, he “will keep a low profile” and that he will stay at the Fed after May 15, when his eight-year term as the chief of the US central bank ends.
In the monetary policy statement, the Federal Reserve commented that the economy remains resilient, noting that the unemployment rate “has been little changed in recent months.” The central bank also acknowledged that inflation is elevated, driven by higher energy prices linked to the Iran conflict.
The Fed added that developments in the Middle East are increasing uncertainty around the economic outlook and emphasized that policymakers will continue to balance both sides of their dual mandate.
The decision passed with an 8–4 vote split. Fed Governor Stephen Miran dissented in favor of a rate cut, while Beth Hammack, Neel Kashkari, and Lorie Logan opposed adding an easing bias to the statement.
Traders’ eyes shift towards the Fed Chair Jerome Powell’s monetary policy meeting at 18:30 GMT.
GBP/USD reaction to the Fed’s decision
GBP/USD fell to a daily low of 1.3467, touching the 100-day SMA ahead of Powell’s press conference. A clear breach would open the path to challenge the psychological 1.3400 figure. On the other hand, if Powell turns dovish, the 1.3500 would be up for grabs.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
United States (US) President Donald Trump is hitting the wires amid the Federal Reserve (Fed) monetary policy announcement. President Trump spoke with his Russian counterpart, Vladimir Putin, about the ongoing situation between Russia and Ukraine and that of the United States with Iran.
Spoke with Putin today.
Talked about Ukraine, Iran with Putin.
We had a very good conversation.
I suggested a bit of a ceasefire in Ukraine.
Putin would like to be of help.
Trump asked which war ends 1st: maybe similar timetables.
Will knock out the rest of the missiles and systems if we don't make a deal with Iran."
Market reaction
Trump's words had no actual impact on financial markets, as investors are dealing with the Middle East crisis and the Fed's announcement, in a wait-and-see mode at the time being ahead of Chair Jerome Powell's speech.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.26% | 0.26% | 0.42% | -0.03% | 0.85% | 0.91% | 0.23% | |
| EUR | -0.26% | -0.01% | 0.13% | -0.29% | 0.58% | 0.67% | -0.04% | |
| GBP | -0.26% | 0.00% | 0.11% | -0.29% | 0.57% | 0.66% | -0.04% | |
| JPY | -0.42% | -0.13% | -0.11% | -0.43% | 0.46% | 0.54% | -0.12% | |
| CAD | 0.03% | 0.29% | 0.29% | 0.43% | 0.90% | 0.96% | 0.25% | |
| AUD | -0.85% | -0.58% | -0.57% | -0.46% | -0.90% | 0.07% | -0.67% | |
| NZD | -0.91% | -0.67% | -0.66% | -0.54% | -0.96% | -0.07% | -0.70% | |
| CHF | -0.23% | 0.04% | 0.04% | 0.12% | -0.25% | 0.67% | 0.70% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
- Silver extends losses as Fed holds rates and signals cautious, data-dependent stance.
- Stronger US Dollar and rising Treasury yields weigh on the non-yielding metal.
- Technically, XAG/USD holds a bearish near-term bias, with momentum indicators pointing to fading upside momentum.
Silver (XAG/USD) remains under pressure on Wednesday as markets digest the latest interest rate decision from the Federal Reserve (Fed), with a stronger US Dollar and rising US Treasury yields weighing on the non-yielding metal. At the time of writing, XAG/USD is trading around $71.20, down more than 2% on the day.
The Fed left its benchmark rate unchanged in the 3.50%-3.75% range, in line with expectations. However, the decision revealed a notable split within the committee, with an 8-4 vote. Governor Stephen Miran favored a 25 basis point rate cut, while Beth Hammack, Neel Kashkari and Lorie Logan opposed the inclusion of any easing bias in the statement.
In its statement, the central bank acknowledged that economic activity continues to expand at a solid pace, while labor market conditions remain relatively stable, with the Unemployment Rate little changed in recent months. At the same time, policymakers flagged that inflation remains elevated, partly reflecting higher global energy prices.
The central bank highlighted geopolitical risks, noting that developments in the Middle East are adding to uncertainty around the economic outlook.
Despite these concerns, policymakers reiterated that they remain strongly committed to supporting maximum employment and bringing inflation back to the 2% target over time, signaling that the current policy stance is likely to remain in place until clearer progress on inflation is seen.
For Silver, the combination of persistent inflation and rising energy prices is reinforcing expectations that interest rates could stay higher for longer. This backdrop remains a headwind for the non-yielding metal, as higher borrowing costs increase the opportunity cost of holding Silver.
Technical Analysis:
In the daily chart, XAG/USD remains under a bearish near-term bias as it holds below the 50-day Simple Moving Average (SMA) at $78.45 and the 100-day SMA at $79.63, while trading above the 200-day SMA at $62.56. This configuration suggests a corrective phase within a broader uptrend, with price capped by medium-term averages.
The Relative Strength Index (14) slipping toward 38 and the Moving Average Convergence Divergence (MACD) below zero with a negative reading both hint at fading upside momentum and a risk of further downside pressure while these overhead barriers remain intact.
On the downside, initial support is seen near the long-term 200-day SMA at $62.56, ahead of the horizontal support level at $54.00, which marks a deeper structural floor if selling accelerates.
On the topside, immediate resistance comes at the 50-day SMA at $78.45, followed by the 100-day SMA at $79.63; a sustained break above this clustered area would be needed to ease the current bearish tone and open the way for a renewed advance.
(The technical analysis of this story was written with the help of an AI tool.)
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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