DXY: Dollar Index Drifts 0.8% Lower to 106.20 as Fed Keeps Rates Steady at 22-Year High

For the second time in a row, the Fed decided to hold rates unchanged but hinted it’s not done raising to stamp out sticky inflation.

• The US dollar index DXY retreated 0.8% to a Thursday low of 106.20 as FX traders digested the latest Federal Reserve update. The central bank left its benchmark lending rate unchanged at 5.25% to 5.50%, a 22-year high, as it’s parsing mixed economic signals such as strong growth data, elevated consumer spending, and increased borrowing costs.
• The index, gauging the dollar’s strength against six rival currencies, is still mostly undefeated in the long run. It’s flaunting gains of 7% for the past four months while other FX peers are nursing heavy wounds from the relentless rally of the greenback. Still, some reprieve was noticed yesterday when the dollar pulled back against the yen for a second straight day.
• In other corners of the currency market, the euro is seen sprinting, taking full advantage of the dollar’s weakness. The EURUSD pair is higher by just over 0.8% in the past couple of trading days, moving from $1.0515 to $1.06. Jobs data is on deck tomorrow and markets are already bracing for volatility.