USD Sells Off as Fed Maintains Rates and Powell Strikes Cautious Tone

In its recent decision, the Fed chose to maintain the policy rate within the 5.25%-5.50% range, as expected. However, the USD experienced a sell-off due to Chairman Jerome Powell's cautious stance on further tightening measures. While Powell did not rule out potential rate hikes, his remarks were perceived as less hawkish than anticipated. Powell acknowledged the need to address inflation but suggested it might require a slowdown in economic growth and labor market activity.

The Automatic Data Processing (ADP) report earlier this week revealed a rise of 113K in US private sector payrolls for October, slightly below the 150K estimate. The Job Openings and Labor Turnover Summary (JOLTS) data showed an increase in job openings to 9.553M, indicating ongoing labor market tightness.

A strong October NFP report could revive expectations of a Fed rate hike, despite the market currently pricing in only a 20% probability of a December increase. There is now speculation of potential rate cuts in 2023, with expectations of up to 85 basis points (bps) of cuts, potentially beginning as early as June.

EUR/USD continues its uncertain direction by moving inside a range of price and waiting for a reversal of breakout even if the Dollar is awake today giving some advantage to the euro.

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.0930	1.0800	1.0700	1.0630	1.0500	1.0400