The US dollar extended its decline today against the euro and the Japanese yen after the Federal Reserve showed that it’s going to add further stimulus to support the failing US economy and at the same time refrained from the buying of the securities.
The Fed refrained from increasing its balance sheet, just as was expected by the analysts. The decision on the interest rates was also in line with the expectations as they remained at their historically record low levels below 0.25 percent. The Federal Open Market Committee said in its statement:
Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability. With substantial resource slack continuing to restrain cost pressures and
It also suggested that the economic conditions “are likely to warrant exceptionally low levels for the federal funds rate for an extended period”. The interest rates in the US will likely remain low for some time, as was suggested by this statement, which is not the case in Europe, making the euro more appealing to the investors.
EUR/USD jumped from 1.3061 to 1.3247 today as of 20:25 GMT, following the advance to 1.3281. USD/JPY dropped from 85.69 to 85.08.
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