The Federal Open Market Committee (FOMC) of the Federal Reserve expectedly decided to maintain the Federal Funds Rate unchanged at 0.25 per cent, in a meeting yesterday that was deluded by the ongoing presidential tribulations.
Unlike the BOE and the RBA, which were the other two prominent central banks deliberating on their respective monetary policy stances this week, the FED refrained from scaling up its quantitative easing program at the present moment.
Jerome Powell and his colleagues would prefer to see the outcome of the election first before they make any significant adjustments to the monetary policy stance. Who ends up winning the White House for the next four years would be of great significance for the future functioning of the underlying monetary policy.
The timing of the election couldn't have been worse for the FOMC. The uptick of COVID-19 cases in the US and worldwide is bound to disrupt the tentative global recovery, which is why many central banks are starting to hedge their bets against another detrimental wave during the winter months.
While the FOMC is compelled to make unconventional decisions relating to the changing political landscape and the unprecedented healthcare crisis, things it would not have to deal with in normal circumstances, its monetary policy stance is bound to be not fully efficient.
Such inconsistencies of MP brought about by external factors could jeopardise the moderate successes of the American economy that have been recorded recently. Namely, the October manufacturing numbers and durable goods orders.
Meanwhile, FED's indecisiveness is exacerbating the woes for the greenback in the near-term. As can be seen on the 4H chart below, the EURUSD continues to gain bullish momentum as a Joe Biden victory seems almost certain. The MACD indicator demonstrates this.
The price action of the pair rebounded from the 23.6 per cent Fibonacci retracement level at 1.18700 and is currently testing the Resistance Area (in green) just below the major resistance at 1.18700.