paul.lengemann's picture

Dollar consolidation is now on the horizon

The Foreign exchange markets are starting the week on a quiet note. Everyone is waiting on the outcome of the FOMC meeting which finishes on Wednesday. Expectations are that the Fed will do nothing. The focus is on the wording of the press release following the meeting. Will the Fed drop the word “patience”. 

After the large move in favor of the dollar which has taken place over the past several month, the failure of the Fed to remove the word "patience" from their statement, could give the market a pause to consolidate at recent levels as a rate increase is deferred from June to later this year or early 2016. This could see the euro move back to the 1.0750-1.0950 level before resuming the downward slide. As dealers use options to spread their exposure the downward direction will resume but at a slower pace.