Fed Cautious Tone Sends US Dollar For Toss

* There was an important risk event lined up recently in the US, as the Fed interest rate decision and FOMC’s projection for inflation and economic growth report was released.

* The Fed did not change the interest rates, and declared rates of 0.5 percent at its March meeting.

* However, the most important point was to note was their projection change regarding the number of rate increases in 2016.

* The decrease in the count sent the US Dollar for toss, and it was seen declining against most major currencies.

Fed interest rate decision and FOMC’s projection

No doubt, the recent Fed interest rate decision and FOMC’s projection for inflation and economic growth report was an eye catching event. The non-event was the fact that the central bank did not change the interest rates, and declared rates of 0.5 percent in the March meeting.

The comment which caught the attention of traders was about the number of rate increases in 2016. The central back was expected to increase rates 4 times in 2016, but according to their latest projections they may do it twice.

Moreover, the number of rate increases in 2017 was also pulled down to just two. Overall, there was nothing much to cheer for the US dollar bulls in the report. It was seen trading lower against most major currencies, including the Euro and the British Pound.

Technical Analysis – EURUSD and GBPUSD

The Euro rocketed higher against the US dollar and traded above the 1.1250 resistance area today. There were many important resistance levels broken during the recent upside surge. It looks like the EURUSD pair may even head towards the 1.1320 level in the near term.

Looking at the British Pound, it also managed to gain bids and traded above the 1.4440 levels. The GBPUSD pair looks like heading towards the 1.4500 area, and the bulls remain in control it may be reached.