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U.S. Dollar Under Pressure Post-FOMC, Focus Turns To U.S. GDP

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The Federal Reserve offered, as expected, no fresh cues and said it will continue with asset purchases. The U.S. dollar started to weaken ahead of the Fed’s statement and accelerated its slide at the central bank’s virtual press conference. However, worries about earlier-than-expected tightening appeared to ease, which could be an early signal of the Fed’s hawkish shift.

Technically, we saw both FX pairs rising on the back of a weakening U.S dollar which was to be expected since there were no surprises from the Fed.

GBP/USD

As long as the pair holds above 1.38, the outlook remains bullish with the focus on the 1.40-reisstance. In case of a bullish breakout above 1.4020 we expect further gains towards 1.4150 and 1.42. Based on the current uptrend channel a higher support is now seen at 1.39.

EUR/USD

The euro was able to stabilize above 1.21 and as long as this crucial barrier holds, we see chances of further gains towards 1.22. But be careful: Given the straight-lined uptrend, the pair is in overbought territory and buyers may seek to take profits around 1.2180, so be aware of corrections. If the euro falls back below 1.2050, we could see a deeper correction towards 1.20.

DAX

The index’s price chart looks boring since there were no major fluctuations. Consequently, the current sideways range between 15400 and 15000 remains intact. A break above 15370 could open the door for a leg up towards 15450 and possibly even a renewed test of the high at 15500. Below 15140, we could see a test of the 15000-support.

Traders will watch the U.S. GDP figures today at 12:30 UTC, that could strengthen the greenback in the short-term, provided the reading will not fail to impress.

We wish you good trades!

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Fed Delivered Hawkish Rate Hike And Boosted Demand For USD

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Dear Traders,

The Federal Reserve delivered a slightly hawkish rate hike with Fed officials expecting three quarter-point rate increases in 2017, up from the two seen in previous forecasts. The Fed’s projections for growth, unemployment and inflation over the next three years were largely unchanged from September. With regard to fiscal policy the FOMC statement did not include language referring to changes in fiscal policy. When asked about how Trump’s fiscal policy plans influenced the Fed’s forecasts and could affect future decisions, Yellen said it was too early to judge how fiscal policy would affect Fed policy.

All in all, yesterday’s FOMC statement had a positive impact on the U.S. dollar even if the risk of a pullback in the greenback persists.

EUR/USD: After having tested the 1.0470/60-support we may see some corrections before year-end. It might be tempting to sell the pair in case of a break of 1.0460 but traders should be careful as liquidity traditionally dries out before the Christmas holiday season.

Yesterday’s trading has been somewhat challenging especially for traders who have not had a proper risk management during the day. An appropriate risk-management is therefore essential for the long-term success.

GBP/USD: The cable broke below its recent upward trend channel but it was able to hold above 1.25.

Today’ focus shifts to the Bank of England and its monetary policy announcement at 12:00 UTC. We prepare for volatile swings in the GBP/USD and hope for some profitable movements. No changes are expected but it will be the central bank’s rhetoric which should have a major impact on the pound.

From the U.S. we have the Consumer Price report scheduled for release at 13:30 UTC, which could affect the price action in the greenback.

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Rate-Rise Expectations Unchanged After Disappointing Payrolls

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Dear Traders,

Market participants were left relatively unimpressed by Friday’s weaker-than-expected U.S. jobs report, which showed the smallest jobs gain in seven months. Although earnings growth came in with an uptick it was not enough to change investors’ expectations of gradual monetary policy tightening. The market’s rate-rise expectations therefore remained unchanged and traders see an even chance of a Fed rate hike this year and only an eight perecent probability of a June hike.

As expected, the euro’s price action remained confined within a narrow trading range between 1.1480 and 1.1380 on the back of an unspectacular payrolls report. The British pound finally decided to drift lower after touching a high of 1.4546 on Friday. We still expect GBP/USD to test the 1.4330/15-level, before we may see a pullback towards 1.4550. A short-term resistance is seen at 1.4465, whereas sterling must now break below 1.44 in order to revive fresh bearish momentum.

This week’s calendar is relatively light in terms of market moving data. Only towards the end of the week we have major important reports scheduled for release. The most important event for sterling traders will be the Quarterly Inflation Report, scheduled for release on Thursday. The Bank of England will publish new forecasts in its inflation report, alongside its interest-rate decision. BoE governor Mark Carney is set to give a press conference on the economic outlook following the release of the inflation report.

The most important piece of economic data from the Eurozone will be GDP reports scheduled for release on Friday. From the U.S., Advance Retail Sales, also due on Friday will be important to watch.

We wish you a good start to the new week and many profitable trades.

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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 2016 Maimar-FX.

www.maimar.co