US Dollar Weakens After FOMC Delays Tapering of QE

Summary:

The USD/CAD shed weight steeply this Wednesday after the FOMC decided that the time for tapering of its QE program had not yet arrived.

The US Dollar lost ground in the late New York session after the Federal Open Market Committee (FOMC) of the US Federal Reserve left rates on hold, but did not deliver the expected language on tapering the quantitative easing program that the markets had hoped for. Rather, the apex bank pledged to maintain the QE program until “further substantial progress” was seen in inflation and employment.

FOMC Chairman Jerome Powell put a stamp on this declaration by saying the Fed was nowhere near close to the point of tapering.

The language of today’s decision led to the greenback being on offer across several pairs. For the USD/CAD, it sets the tone for some more downside, as the BoC took the opposite stand last week.

Technical Outlook; USD/CAD

The pair witnessed a steep fall, losing 0.69% on the day. The drop brings the pair towards the channel’s lower border, with the threat of a breakdown and cascade of the price below 1.23 a very real possibility at this stage. Below this level, 1.22748 (22 January 2018 low) and 1.22467 are additional targets to the south.

On the other hand, a bounce at the nearest support attacks 1.2367, with 1.2399 serving as upside targets.