US Dollar approaches 13-month lows after FOMC disappoints

The US Dollar Index, which tracks the greenback against a basket of six trade-weighted peers, came under a renewed pressure after the FOMC released its July meeting statement. The index, which has been moving quietly around the 94 handle, quickly dropped to 93.50 and is now at 93.55, losing 0.4% on the day.

• Fed leaves interest rates unchanged at July meeting

According to the press release, all of the Committee members voted to keep the interest rates unchanged at its current target range of 1.00% - 1.25%, which was widely expected. Although the July meeting statement looked nearly identical to the June statement, there were a couple of points of interest for the markets. The Committee, who said that the balance sheet normalization program would start this year in June, changed its language to say that it would start "relatively soon."

• Comparison between July and June FOMC statements

This alteration in the language could have been assessed as a sign that the Fed might not begin shrinking the balance sheet this year, which would be a step towards a more dovish stance in the near-term.

Technical outlook

93.46 (13-month low that was set yesterday) could be seen as the first technical support. A break below that level could open the door towards 93 (psychological level/Jun. 23, 2016, low) and 92.50 (May 2, 2016, low). On the upside, resistances could be encountered at 94 (psychological level/daily static resistance), 95 (Jul. 20 high) and 95.60 (Jul. 14 high).