US Dollar Plunges Below 100 After Fed's Dovish Stance: ING Analysis

What happened

The U.S. dollar fell sharply after the FOMC, pushing the DXY index below 100.0. The selloff follows Fed Chair Warsh's ambiguous remarks and data showing core PCE inflation rose only 0.1% month-on-month in June while Q2 growth annualized at 1.5%, both missing expectations. Japanese yen intervention also triggered USD/JPY declines, and ING's Francesco Pesole notes stretched net-long USD positioning versus G9 currencies, leaving room for further long-squeezing.

Why it matters

The dollar's decline signals a possible shift in market sentiment and could affect currency pairs, interest rates and asset prices. Analysts are reluctant to call a bottom: further disappointing U.S. data, or renewed oil-price pressure, could trigger a larger dovish repricing. With FOMC dissents possible, markets are likely to scrutinize officials' remarks to gauge future voting intentions.