USD/CAD drops to test yesterday’s lows as the US dollar sinks

• US dollar collapses after Fed’s meeting, Chair Powell delivers press conference. 
• US yields move lower and Wall Street soars. 

The USD/CAD pair fell from 1.3320 to test yesterday’s low near 1.3250 in a few minutes following the FOMC meeting. The US central bank as expected kept rates unchanged and announced that it will end the balance sheet runoff in September. The staff projections contained downward revisions to growth and inflation, and signaled no rate hikes over the year. Chairman Powell mentioned during the press conference that the Fed will make additional adjustments to balance sheet plans if needed. 

US yields dropped sharply while equity prices in Wall Street turned positive after the announcement. Commodity and emerging market currencies rose significantly against the US dollar. Despite rising versus the greenback, the Loonie weakened against other currencies that were more benefit by risk appetite. 

The USD/CAD bounced modestly from the lows and as of writing was trading at 1.3265/70, down 50 pips for the day, still near weekly lows. A break under 1.3250 could add bearish pressure. The next support is seen at 1.3220/25.