The US dollar fell on Wednesday after the announcement of the results of the US Federal Reserve meeting.
The US dollar index tested two-week lows against the background of the soft tone of the Fed's statements.
Following the results of the two-day meeting, the Fed left the parameters of monetary policy unchanged, as expected.
The final statement notes that the economy has made progress in meeting the targets for employment and inflation, and that the central bank will continue to evaluate its stimulus programs.
The US dollar weakened after the Fed softened the tone of its statements and avoided a clear indication about the timing of the start of the curtailment of stimulus.
The resumption of the increase in the incidence of COVID-19 supports the forecasts of those who expect the continuation of monetary stimulus until at least the end of 2022, which some analysts consider a negative factor for the US currency.
The Fed has announced the launch of a new type of operations to provide dollar liquidity. From July 29, the Federal Reserve Bank of New York will conduct repo operations with American banks and foreign central banks on a daily basis.
The Federal Reserve is preparing a tool in advance to prevent a repeat of the 2019 liquidity crisis. In the meantime, the markets see the actions of the regulator as a continuation of the "printing press" policy.
Fed Chairman Jerome Powell said during a press conference that the Fed is still far from starting discussions on raising interest rates. He promised that the Central Bank will give many signals to the financial markets before starting to curtail purchases, so as not to catch investors by surprise. In April, Powell said that the conditions for such a step by the Fed have not yet developed, and in June he stated that the economy is very far from the necessary indicators.
"The approach of the US central bank plays into the hands of USD sellers, forming the basis for a pullback to the lower limit of the trading range around 89.60 at DXY. The key pair of the currency market, EURUSD, has once again received support over the past 12 months on the decline in the area of 1.16-1.17. The development of this movement opens the way to the area of this year's highs 1.22–1.23