Danske Research discusses its reaction to yesterday's FOMC June policy meeting.
"We expected Powell to be hawkish at yesterday's FOMC meeting but he overdid our expectations. In line with this, EUR/USD dropped from somewhat above 1.21 to below 1.20 which is a large drop on a single event and probably goes to show that markets where not expecting this. Notably, Powell said this was indeed the meeting where 'talking about talking about tapering' had happened and he repeated a forward looking statement in regards to a likely 'very very strong recovery in the labour market'. The Fed has repeatedly been unwilling to say such," Danske notes.
"Hence, a shift in forecasting rate hikes but the choice of words and rhetoric was quite hawkish when put together...EUR/USD likely to trade 1.17-1.22 over coming weeks as markets digest hawkish FOMC," Danske adds.