Fed Decision Leaves Forex Market Set for Dollar Short Squeeze
- Dollar has first gain in 5 days despite accommodative outlook
- Euro drops to test 50-day moving average, a key support level
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The lack of a killer dovish catalyst from the latest Federal Reserve meeting triggered a near-term rally in the dollar as sizable short positions in the under-pressure currency were unwound.
Despite Chair Jerome Powell emphasizing unprecedented accommodative policy for at least three years in Wednesday’s Fed statement, a dollar gauge made its first advance in five days on Thursday to rise as much as 0.4%. It steadied on signs short-term position re-balancing was complete.