The FED’s statement today essentially stated that the economy is improving and we should expect a tapering of asset purchases sooner rather than later. Expectations on when the Fed funds rate will begin to rise were also brought forward. Obviously this type of news is Dollar bullish, so it was no surprise to see an already deeply sold-off dollar rocket higher.
This news was the catalyst the dollar was looking for to move higher out of a natural Daily Cycle Low. It had already turned days before the announcement, so it was the news that provided the fuel. As the sell-off leading into this DCL was very severe, the Dollar has the potential to rally for a solid 5-7 days before it hints at turning lower.