The last Federal Open Market Committee (FOMC) meeting of the US Federal Reserve for the year 2017 will start today. All meetings last two days and the Federal Chairman will announce the results during a press conference after the meeting has been concluded. Many Fed watchers predict the outgoing Federal Chairwoman Janet Yellen will announce an interest rate increase of 25 basis points. This will leave the official Federal Funds Rate at an upper bound level of 1.50% and a lower bound level of 1.25%.

Today we will start with a simple question: What is potentially the most overlooked weapon in the arsenal of central bankers? The use of interest rate cuts as well as increases is probably the best known tool central banks use. More recently quantitative easing has become a very popular experiment from Tokyo to London and from Frankfurt to Washington. One very obvious tool, but often not viewed as one, is communication. Central bankers use communication as a tool in order to prepare financial markets for what is about to come or to leave room to reverse a decision.

This week will be very important for the US dollar. The speech by Fed chief Janet Yellen today and Nonfarm Payrolls data release on Friday can greatly affect the investors' expectations from the meeting of the Federal Reserve in June.

The US Dollar sold off during yesterday’s trading session after the US Federal Reserve kept interest rates on hold as expected, but the press conference by US Fed Chief Janet Yellen was the driving force behind a much lower US Dollar. Forex traders should be careful as the sell-off which started yesterday may continue throughout the trading week as more economic data out o