The Dollar Fell as Riskier Assets Surged in Response to the Fed's Decision

USD/CAD fell dramatically in the aftermath of the Fed meeting and during the press conference of the Fed Chair. The Federal Reserve concluded its two-day monetary policy meeting on Wednesday, hiking interest rates by 50 basis points and signaling to the markets that it will continue to monitor the market environment.

On June 1, the Fed will begin reducing its balance sheet. This was a foregone conclusion and is seen as quantitative tightening.

The Federal Reserve will initiate the run-off of 47 billion and 95 billion dollars off its balance sheet in three months. Consumer and business expenditures continue to be robust. Economic activity was almost certainly harmed by the invasion of Ukraine. The Fed stated that the Chinese lockdowns would almost certainly result in more supply chain disruptions.

Technical Evaluation

On Wednesday, the USD/CAD reversed and fell. It reached 2022 highs early in the week and then consolidated. Near the May high of 1.2920, resistance is present. Support is seen near the 1.2685 20-day moving average. The 20-day moving average has crossed above the 50-day moving average, indicating the start of a medium-term uptrend.

Short-term momentum reverses to the downside as the fast stochastics may be approaching a crossover sell signal. The medium-term momentum is bullish, since the MACD line generated a buy signal upon crossover. The MACD's trajectory is bullish but decelerating, indicating consolidation.