EUR/USD tumbles to one-month lows near 1.2040 after FOMC statement

• Federal Reserve keeps monetary policy unchanged, no mention of tapering, raises inflation expectations.
• US dollar rises sharply across the board; US yields marginally higher.

The EUR/USD tumbled from 1.2115 to 1.2045 after the Federal Reserve announced its decision on monetary policy, reaching the lowest level since May 6. The greenback rose sharply on the back of the Fed seen higher inflation expectations and also as FOMC projections show now two hikes in 2023.

As expected, the Fed kept interest rates and the QE program unchanged. The statement was little changed compared with the previous one. There was no mention of a tapering in asset purchases. The statement and the economic projections just released will be flowed by a press conference with Fed’s Chair Powell, starting at 18:30 GMT.

The DXY soared to 90.95, the highest level since early April; stock printed fresh lows and metals dropped sharply in the bond market, US yields moved to the upside.

The EUR/USD so far found support at around 1.2050. A consolidation below 1.2100 would be a negative development, while if it rises back above, the next resistance stands at 1.2135, followed by 1.2160 and 1.2200.

Technical levels