US Dollar Index: USD Implodes After Fed Statement

Impact

On Wednesday the Federal Open Market Committee threw traders a curveball by announcing it would not start tapering its 85bn a month bond-buying program, whereby it purchases $45bn in Treasuries and $40bn in mortgage-backed securities from financial institutions. The Dollar Index reacted sharply and negatively, sending it plummeting against a basket of currencies and toward levels not seen in three months:

The 80-mark could serve as good support, as the initial reaction to the Fed's announcement may have been overdone. Although the Fed was expected to trim bond buys by $10bn-$20bn, overall this is small given the total amount of stimulus the central bank has pumped into the economy since the financial crisis.