• The aussie U-turns from 0.9490 and dives to one-week lows at 0.9350.
• Fed Powell takes a hawkish stance and sends the USD higher.
• The dollar suffered following a dovish tilted FOMC statement.

The US dollar whipsawed following the outcome of the Federal Reserve’s meeting. The Aussie spiked up to session highs right above 0.6500 following a dovish monetary statement before plummeting to 0.6350 on the back of Powell’s press release.

Fed Powell takes the hawkish side and boosts the USD

The dollar made a dramatic U-turn following Fed President Jerome Powell’s comments at the bank’s press release. Powell struck a more hawkish tone in front of the journalists, offsetting the impact of the previously released statement, and sending the US dollar higher.

Jerome Powell refuted the idea that the bank might have overtightened and reaffirmed the need for ongoing rate hikes to get policy sufficiently restrictive.

Beyond that, he affirmed that economic data suggests that “we may eventually move to higher levels than we anticipated at the September meeting”, which has curbed expectations of a dovish pivot in December.

In regards to the next meeting, Powell assured that there will be a discussion, as no decision has been taken yet and that the time to slow the pace of rates could be as soon as December or at February’s meeting.

Previously, the FOMC statement affirmed that the pace of future rate hikes will be decided considering “cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

The bank met expectations and hiked rates by 75 basis points for the fourth consecutive time, leaving the Federal Funds Rate at the 3.75% - 4.00% range.

Technical levels to watch