The key event risk for the US Dollar during the 3/18 session was the FOMC statement. As we wind down Q1, traders will be more sensitive to the tone of FOMC’s monetary policy statements. After the 2-day meeting, the vote was expected a hold on the interest rate. The statement scaled back on some of the more hawkish statements and made it clear a rate hike “remains unlikely at the April FOMC meeting.” (WSJ) At the same time, the committee also scaled back on the dovish tone regarding inflation. Overall, the statement is neutral, but the market acted as if it were dovish, selling the USD across the board. The market is always right, but we are only seeing an intrasession move, so let’s not put too much weight on the initial reaction. The EUR/USD had a strong reaction. rallying from around 1.0600 to about 1.1050 before stalling as we can see in the daily chart. EUR/USD 4H Chart 3/19(click to enlarge) Considering the diverging direction of monetary policy between the FOMC and the ECB, we should remain bearish on the EUR/USD. A good price level to monitor for resistance is around 1.1250, where the 50-day SMA resides. This is also around a common support level during February’s consolidation. If the RSI also approaches 60 and stalls while price finds resistance around 1.1250, we should be ready for a bearish continuation attempt back towards at least the 1.0500 area. The USD/JPY is another pair that should remain bullish in the medium-term after a short-term pullback based on the direction of the FOMC vs. BoJ. USD/JPY Daily Chart 3/19(click to enlarge) If the market is still bullish as I theorized, USD/JPY should find support around the central pivot of its consolidation since December, which is around 118.40. Inability to hold above 118 however would show that the USD/JPY is still in consolidation mode and might remain that way until the next FOMC meeting in April. In that scenario, we should expect some more short-term bearish outlook, but respect the 115.50-116 consolidation lows as support.