US dollar crashed to fresh lows amid signals from the Fed
Federal Reserve's Committee on Open Market Operations is expected to maintain the federal funds rate and confirm its willingness to do whatever is necessary to limit damage from the Coronavirus pandemic and ensure economic recovery.
US dollar index fell to a fresh multi-month low around 93.16 after the announcement of the results of the meeting. The subsequent attempts to recover from the profit taking wave attracted a fresh interest to sell and now the index is trading around 93.29.
Optimism in the ranks of bears on the dollar fueled the Fed's decision to extend the dollar repo and swap lines for foreign central banks until March 31, 2021, as well as the rhetoric of the head of the regulator Jerome Powell, who noted the significant role of fiscal policy and the need for additional measures to support the economy with its instruments. While the Fed made it clear that the outlook for monetary policy depends on how the situation with the virus develops, Powell's statements that some people will not be able to return to their previous jobs, the recovery of the labor market will be long and the Fed will have to fight disinflationary risks for some time, were taken as a signal of a long period of ultra-soft policy, which has such a negative impact on the dollar.