US Dollar Falls As Fed Signals Pause In Further Rate Hike

(RTTNews) - The U.S. dollar weakened against other major currencies in the Asian session on Thursday, as the Federal Reserve signaled it may pause further rate hike after the U.S. Fed hiked interest rates for the tenth straight time on Wednesday overnight.

Fed Chair Jerome Powell's comments during his post-meeting press conference led to renewed uncertainty about the outlook for rates. Powell said the central bank would take a "data-dependent approach" to future monetary policy decisions.

The unanimous decision to continue raising rates came as the Fed noted inflation remains elevated while also observing that job gains have been robust in recent months and the unemployment rate has remained low.

The Fed on Wednesday raised its benchmark overnight interest rate by a quarter of a percentage point, to the range of 5-5.25% in May, as expected.

The U.S. dollar fell against its major rivals after the Fed meeting overnight and slightly rebounded thereafter.

In the Asian trading today, the U.S. dollar fell to 1.2592 against the pound for the first time since 8th June 2022 and 0.8819 against the Swiss franc for the first time since 7th January 2021, from yesterday's closing quotes of 1.2563 and 0.8819, respectively. If the greenback extends its downtrend, it may find support around 1.26 against the pound and 0.86 against the franc.

Against the yen, the greenback dropped to a 6-day low of 134.34 from yesterday's closing value of 134.68. The greenback may test support around the 132.00 area.

The greenback edged down to 1.1088 against the euro, from yesterday's closing value of 1.1059. On the downside, 1.11 is seen as the next support level for the greenback.

Looking ahead, Eurozone PMI reports for April, U.K. mortgage approvals data for March and S&P Global/CIPS final services PMI for April, Eurozone PPI for March are due to be released in the European session.

At 8:15 am ET, the European Central Bank is set to announce its monetary policy decision. The ECB is widely seen raising the key refi rate by 25 basis points as inflation is expected to remain high for too long.

ECB President Christine Lagarde is set to hold press conference at 8.45 am ET.

In the New York session, Canada and U.S. trade data for March, U.S. weekly jobless claims data and Canada Ivey PMI for April are slated for release.