And at the end of the Federal Reserve story, traders that had hoped for a short squeeze in some USD-crosses left disappointed. Thus, we had to be satisfied with some small gains when trading the dollar’s rise.
Overall, yesterday’s FOMC decision was viewed as hawkish. As a result, bond yields moved higher and the U.S. dollar appreciated. Fed chair Jerome Powell said the central bank was ready to raise interest rates in March (which was expected) but the most hawkish take-away is that Fed policy makers didn’t rule out moving at every meeting to tackle the highest inflation in a generation. In other words, the central bank is willing to hike faster given high inflation than ease in the face of downside surprises.
The greenback advanced. Let’s briefly look at the next targets in both EUR/USD and GBP/USD.
EUR/USD: Next bearish target is the 1.12-handle. If the pair breaks below 1.1180, we will turn our focus to a next medium-term target at 1.10. As long as the resistance at 1.14 remains intact, the outlook is bearish.
GBP/USD: Support area between 1.34-1.3370 is still intact. Bears will wait for a break below 1.3350 in order to sell sterling towards 1.32. A current resistance-area is however seen between 1.3670-1.37.
Disclaimer: All trading ideas and expressions of opinion made in the articles are the personal opinion and assumption of MaiMarFX traders. They are not meant to be a solicitation or recommendation to buy or sell a specific financial instrument.
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