Market participants are focusing on Powell's uncertain comments following the FOMC meeting, which has negatively impacted the US dollar exchange rate.

The US dollar exchange rate weakened against all other major currencies, as the press conference following the announcement of the FOMC meeting results in the early hours today has eroded speculation about further Fed interest rate hikes.

The US Dollar Index (DXY) opened with a gap down from 106.67 on Wednesday's close to 106.50 at the start of the Asian session on Thursday (November 2), and the bearish trend continued as this news was written.

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The Federal Open Market Committee (FOMC) maintained the interest rate within the range of 5.35% to 5.50%, in line with market expectations. The FOMC expressed the possibility of further interest rate hikes if necessary, which is consistent with their statements following previous meetings. However, Federal Reserve Chair Jerome Powell made dovish-leaning comments in his press conference.

Powell stated that the central bank is not considering interest rate cuts at the moment, and they won't discuss it until inflation is genuinely under control. In order to restore price stability, Powell assessed that the U.S. economic growth needs to slow down further, and labor market conditions need to decline more. At the same time, he noted that financial conditions are tightening, and there are many risks ahead.

Powell revealed that the best course of action at the moment, given the high level of uncertainty, is to maintain the Fed's interest rates within the range of 5.25% to 5.50% while monitoring the development of data until the next policy meeting in December. When asked if the Fed is leaning towards raising interest rates rather than keeping them at their current level, Powell responded by asking, "That's the question we're asking. Should we raise it again?"

Market participants now are focusing on Powell's uncertainty-laden comments, which have led to a hit on the US dollar exchange rate. Most experts now believe that the Fed will maintain the same interest rates throughout the next year unless there are deviations from expectations.

"The economy's resilience has not stalled labor market rebalancing or revived wage and price pressures, suggesting disinflation will progress and indicating that the Fed will likely keep its policy unchanged into 2024," said Whitney Watson from Goldman Sachs Asset Management.

"Nevertheless, there are risks in both directions. The rise in inflation expectations, owing to higher gas prices, combined with strong economic activity, preserves the prospect of another rate hike," Watson adds.