The EURUSD managed to end the week at around the same level it was before yesterday’s Fed’s announcement, near 1.3600. Traders are re-evaluating the importance of the rate hike — the supposition of an approaching monetary policy tightening could be exaggerated.
A strong day in equities brought back demand for risk which helped currencies recover their losses. The AUD climbed back to the high .89s, and the pound retraced to the 1.5460 region, after a drop to its lowest level in nine months.
But this late week dollar devaluation isn’t a sign of a broad reversal according to some bank analysts:
“If on top of that we see the market also becoming more confident on the U.S. recovery and the Fed moving towards hiking the Fed funds rate eventually, that could push the euro significantly lower” (UniCredit Group in London).
"We continue to see the dollar outperforming the euro, the pound and the yen - currencies of countries where the economic recovery appears to be lagging." (Wells Fargo).
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