The dollar trimmed losses on Wednesday as the market digested the outcome of the US midterm elections and shifted its focus to the conclusions of the Federal Reserve's monetary policy meeting, which are due to be released later today.
The market expects the Fed to keep its benchmark interest rate at the current 2.25% and to maintain that the positive economic and inflation expectations support their gradual monetary tightening plan, probably hinting to an interest rate hike in December.
EUR/USD: hits resistance at 1.1500. The euro advanced to three-week highs at 1.1500 immediately after the release of the US midterm elections results, to trim gains afterwards and closed the day practically unchanged, at 1.1425 area. As at London market opening times, the EUR/USD is trading at 1.1435.
GBP/USD: fresh 3-week highs at 1.3200. The pound extended its rally to reach fresh three-week highs at 1.3175, buoyed by the reports suggesting that UK and the EU are close to a Brexit deal, before pulling back to the lower range of 1.3100. As at London market opening times, the GBP/USD is trading at 1.3125.
USD/JPY: downside contained at 113.00. The US dollar reversal after the US elections' result was supported at 113.00 and the pair has resumed the uptrend, to reach levels close to 114.00. As at London market opening times, the USD/JPY is trading at 113.65.
Today, the European Commission will release its growth forecasts. After the economic slowdown seen in the third quarter and amid the growing concerns about the recent rejection of the Italian budget, the conclusions of the Commission might have a significant impact on the euro.
The event of the day, however, will be the Federal Reserve's monetary policy meeting. The Fed is not expected to change its benchmark interest rates and therefore, the main interest will be on the bank's statement to find confirmation of a December rate hike, which might have a positive impact on the dollar.