There was nothing in the FOMC statement or press conference that screamed that it was time to sell the dollar or buy risky trades, but that is what happened. The biggest move during Powell’s appearance was when he said that 75bp raises would not be common, but he immediately said that the next meeting will be 50 or 75bp.
Depending on the market reaction, there will be a dovish narrative, or perhaps the conclusion is that “the Fed is finally taking inflation seriously” or that this will mean the terminal rate is lower due to aggressive action now.
Instead, I would lean more toward extremely negative market positioning and pricing over the last couple of days. It was a defeat and a rebound was due. There is always fear and angst ahead of the FOMC and it often relaxes. Last month, the market rose 3% after the FOMC to fall 13% afterwards. Historically, Fed day is the best day in the calendar for risky trading.