The U.S. dollar started this week on a weaker note against other major currencies and Wednesday’s Federal Reserve policy assessment, which has held firm against hawkish expectations could even increase the pressure on the greenback, at least in the short-term. The Fed is expected to keep interest rates near zero and signal no change in their monthly bond purchases at Wednesday’s meeting. Fed Chair Jerome Powell has primed market participants to fear no surprises, so could it thus be a non-event for traders? Maybe, since policy makers refrained from providing further guidance on the conditions which would warrant a tapering of the central bank’s quantitative easing. However, speculative positioning could spur some volatility in USD crosses around the time of the Fed’s press conference.
On Thursday traders will watch U.S. GDP data which is forecast to show a 6 percent growth in the first quarter.
Let’s take a brief look at the technical picture:
We currently see the pair breaking above 1.2110, the descending trend line, which could lead to further gains towards 1.2170 and 1.22. Bears, on the other side, may watch out for a break below 1.2030 that could result in a test of lower support levels at 1.1950 and 1.19. However, as long as the euro trades above 1.20, the short-term outlook remains bullish.
The technical picture has not fundamentally changed with the cable remaining in a 200-pip range between 1.40 and 1.38. The outlook remains however bullish – provided the pair holds above 1.3770. An upside break above 1.40 would open the door to further gains towards 1.41 and 1.4250.
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