US Dollar stays in daily range as Fed doesn't offer any surprises, eyes on tariffs announcement

• As expected, the Fed keeps the policy rate unchanged.
• December rate hike odds increase slightly after FOMC's statement.
• White House is expected to announce new tariffs later in the session.

The US Dollar Index, which tracks the greenback against a basket of six major currencies, dropped to 94.53 with the initial reaction to the FOMC statement before staging a modest rebound. As of writing, the index was up 0.05% on the day at 94.60.

In a widely anticipated decision, the FOMC announced that it maintained its policy rate in the 1.75%-2% range and reiterated that further gradual rate hikes would be in line with the economic expansion, strong labor market, and the inflation objective. The CME Group FedWatch Tool's rate hike odds for September eased to 90% while the probability of a second rate hike in December increased to 66.4% from 64.7%.

In the meantime, Wall Street reported that the U.S. was getting ready to announce 25% tariffs on a proposed $200 billion worth of Chinese imports compared to 10% in the original plan. The White House is expected to make a statement at 19:30 GMT.

Earlier today, the data published by the ADP showed that the private sector employment increased by 219K vs. the market expectation of 185K while the manufacturing PMI figures released by the ISM and Markit both pointed out to a slowdown in the pace of expansion of the economic activity in the sector. 

Technical outlook

The index could face the first support at 94.40 (50-DMA), ahead of 94 (psychological level) and 93.20 (Jul. 6 low). On the upside, resistances align at 94.60 (20-DMA), 95 (psychological level) and 95.65 (Jul. 19 high).