Probably, it was the dots plot that made so much noise. predictions showed that Yellen and Co. are still ready to raise the rate one more time this year.The Fed also starts shrinking its $4.5 trillion balance of assets in October. Actually,this one was also quite predictable and had been chit-chatted for some time among the markets.
EUR/USD dropped below strong support at 1.19 on the hawkish FOMC. The probability of a December rate hike is now neither more nor less 60%. That means USD bulls can’t count on the tightening policy from the Fed anymore.
And if markets understand soon they overestimated the Fed hawkishness, that means EUR has formed the bottom at the area of yesterday’s lows and will start its way back to the September,8th highs at 1.2092. Still, the pair will have to be well-armed to break the area of tough resistance at 1.20.