Forex Market Review – EURUSD hits 5-week high; gold jumps after Fed statement

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Euro climbed to its highest level in nearly 5 weeks against the dollar in reaction to the U.S. Federal Reserve decision to keep interest rates low for longer than anticipated, pushing back the target to 2014 instead of 2013. The interest rate differential between euro and dollar makes the USD less attractive.

EURUSD had dropped to a day low of 1.2929 on European debt concerns but the Fed statement overshadowed  any European crisis news during the New York trading session, and boosted euro to 1.3119.

GBPUSD rose to its highest level since late December to peak at 1.5677. Earlier in the day, sterling dropped to 1.5534following weak GDP data in the UK but due to the weak dollar, the pound soon made up for losses.

Against the Japanese yen, the dollar also cut its gains made earlier in the day when Japan’s trade balance recorded a deficit for the first time in 30 years. USDJPY plummeted from a two-month high of 78.27 to 77.55 after the Fed rate announcement.

AUDUSD jumped to its highest since October 31, hitting 1.0618 after rising from a US session low of 1.0443.

Gold was the biggest gainer, gaining over $60 by rising from $1,648 to $1,712. Gold and US dollar have an inverse relationship, so when one rises, the other falls in price.