EUR/USD Sinks After FOMC Meeting

The Federal Open Market Committee ended its two-day policy meeting today. FOMC did not change its monetary policy, but said that it looks like the economy is improving. Such view suggests that the Federal Reserve may reduce its stimulus in the near future. Indeed, Fed Chairman Ben Bernanke suggested after the announcement that the central bank may taper quantitative easing later this year. This made EUR/USD slump.
US crude oil inventories increased by 0.3 million barrels last week, in line with forecasts, and are above the upper limit of the average range for this time of year. The stockpiles expanded by 2.5 billion barrels in the week before. Total motor gasoline inventories increased by 0.2 million barrels and are also above the upper limit of the average range. (Event A on the chart.)
FOMC left its monetary policy unchanged. (Event B on the chart.) Yet the Committee noted:

The committee sees downside the risks to the outlook for the economy and the labor market as having diminished since the fall.

FOMC also improved its economic projections, suggesting that the US economy is on the stable path to recovery. Bernanke said on the press conference after the meeting:

If the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year.



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