U.S. Dollar Mixed After FOMC

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Dear Traders,

The U.S. dollar produced a mixed reaction to the FOMC statement and unfortunately, we were caught on the wrong foot when we tried participating in yesterday’s choppy waters. While the dollar showed some pullback on the initial release of the statement, that rebound proved short-lived with the dollar finishing the trading day cautiously higher against the euro and British pound.

The FOMC announcement didn’t really disappoint dollar bulls with the Fed upgrading its view on inflation, even though not so much on economic growth. The chances of a rate hike next month are at 100 percent while odds for a September and December hike remain unchanged.

Trading the choppy swings yesterday proved unsuccessful for day traders but that’s trading and these days can happen.

The euro faces some event risk today with the Eurozone Consumer Price Index, scheduled for release at 9:00 UTC. If CPI data disappoints we might see a drop towards 1.19 in the EUR/USD. Euro bulls, however, should watch out for price breaks above 1.2030.

The British pound dropped to a low of 1.3554 in the aftermath of the FOMC. If the GBP/USD remains below 1.3620 we expect the cable to extend its losses versus the greenback.

From the U.S. we have the ISM Non-Manufacturing Index scheduled for release at 14:00 UTC today.

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FOMC To Provide An Excuse For Profit-Taking On Dollar Long Positions?

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Dear Traders,

The U.S. dollar showed no signs of weakness and extended its gains versus other major peers Tuesday. Thus, short traders in the EUR/USD and GBP/USD were once again able to book a good profit.

Having just warned in our analysis from Monday that signs could point to a bearish breakout, that break below crucial key levels in both of our major currency pairs came faster than we had expected. Despite the oversold situation in many major pairs and the need for consolidation, the U.S. dollar continued its bullish bias for the 9th trading day pushing its counterparts even lower. While the greenback’s linear rise is surprising, many traders wonder how long this dollar move will last. However, we continue to warn traders of profit-taking and potential pullbacks.

The market focus will now turn to the Federal Reserve meeting and FOMC rate decision today at 18:00 UTC.  The expectation for any change in monetary policy is very low at this meeting with no updated forecasts and no press conference from Fed Chairman Powell. However, the meeting should be a runway for another rate hike in June and if Fed policy makers don’t commit to rate increase next month the dollar will quickly fall as market participants are positioned for hawkishness from the Fed.

Investors will closely watch for whether the Fed makes more explicit its intention to raise rates three more times this year, for a total of four hikes in 2018.

In a nutshell, while the policy statement is expected to tilt to the hawkish side, there is a risk of disappointment. Dollar bulls may thus take the opportunity to take profit on dollar long positions.

Before coming to the FOMC decision, we will watch the ADP Employment Change at 12:15 UTC.

EUR/USD

The euro fluctuates around the 1.20-level while still being in oversold territory. We now expect the pair to trade between 1.2050 on the upper side and 1.1950 on the lower side.

GBP/USD

Given the strong bear candles in the daily chart we expect the risk to remain tilted to the downside with a lower target being at 1.3530/1.35. However, the cable is deeply oversold, which is why we prepare for pullbacks towards 1.37 and 1.3730.

 

 

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Copyright © All Rights Reserved 2018 Maimar-FX.

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Quiet Trading On May 1st?

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Dear Traders,

We welcome you to the trading month of May. May 1st is a public holiday in many countries with many major markets shut for holidays. Trading in the Forex market could therefore be quieter than usual but that doesn’t necessarily mean that there will be no profitable movements. Let us be surprised.

Yesterday we saw the U.S. dollar continuing its rally against the euro and British pound with the GBP/USD touching a fresh low at 1.3712, slightly above the crucial 1.37-boundary. Following the recent declines and with both EUR/USD and GBP/USD hovering around key technical levels now, traders should expect some short covering around crucial support levels. In other words, prepare for consolidated movements around 1.20 in the EUR/USD and 1.37 in the GBP/USD.

EUR/USD: The euro was able to hold above 1.2050 and it will now hinge on the appetite for USD whether the euro falls towards 1.1990 or stabilizes above 1.2150.

GBP/USD: The cable rejected the 1.3710-level and consolidated between 1.38 and 1.37. Whether we will see some extended market moves above or below that zone remains to be seen. Above 1.38, we expect a next resistance to come in at around 1.3840 whereas on the bottom side, a next lower target could be at 1.3650.

Sterling traders will watch the U.K. PMI Manufacturing at 8:30 UTC today.

Furthermore, we have the ISM Manufacturing Index due for release at 14:00 UTC.

Daily Forex Signals:

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View our daily signal alerts https://www.maimar.co/category/daily-signals/

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We wish you good trades and many pips!

Any and all liability of the author is excluded.

Copyright © All Rights Reserved 2018 Maimar-FX.

www.maimar.co