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Thursday, March 16th
The EUR/USD pair is retreating from its post-FOMC 5-week highs, marked on Wednesday at 1.0746 level. Yesterday the dollar fell sharply against basket of its main competitors, as market’s participants remained unimpressed by neutral stance from the FOMC at its meeting. By the time of the announcement of meeting results investors had already priced in Fed rate hike, while committee left its economic projection steady, thereby lifting the pair for more than 100 pips. Moreover, rumors, appeared due to dovish economic statement, that the Fed will increase its interest rate only once this year instead of two hikes, discussed previously, are additionally weighing the dollar across the board. Today the pair will continue to retreat from its recent tops, as the dollar is correcting higher vs. its main competitors and traders are performing profit-taking actions after major rally, seen yesterday, while the US economic calendar will also be able to bring some impact to the pair later during NY trades.
The GBP/USD pair has eased part of its previous gains, however, remaining firmer. As it was expected yesterday the Fed increased its refinancing rate for 25bps up to 1%, but kept its policy outlook steady. Following uneventful FOMC statement and less hawkish Fed Chair J.Yellen’s comments, the pair spiked the 1.23 level, but reversed part of its gains later in Asia. On the other side, cautious sentiments are still gripping the pound, as investors’ attention shifts toward the BOE monetary policy decision. Expectedly the Bank will keep its interest rate unchanged, however, weaker stats of UK economy indicates that the BoE is going to have tough times, so any comments from policymakers on UK economic outlook will be closely watched for further developments around the pound. Also today the US economy will release another portion of heavy data, providing the market with impact later in NA session.
The dollar/yen pair extends its bearish run, remaining within striking distance of its 2-week lows, posted just a few pips below 113.00 spot, mostly ignoring BoJ's monetary policy decision. The CB of Japan left its interest rate unchanged, while keeping its economic assessment unchanged as well. Moreover, BoJ Governor H.Kuroda was also unable to impress the market with his comments during press conference, once again noting that the Bank is ready to adjust monetary policy in both ways depending on situation. Yesterday the pair fell for about 150 pips, following unimpressive FOMC statement. Moreover, the pair will remain highly pressured today, as weaker sentiments around the dollar continue to drive the pair in south direction. Looking ahead, today the US docket remains full of important economic releases, while RO-RO trend and sentiments around the US currency will continue to determine pair’s further direction.
The NZD/USD pair is showing pretty choppy trades this morning, following recent economic events. Yesterday the pair rose to its two-week highs, posted at 0.7049 mark, as the market reacted negatively on less hawkish FOMC statement. However, later the pair lost part of its positions, following weak NZ GDP data. Additionally, slight US dollar’s correction against its main peers is also collaborating with pair’s retreat lately. Today the pair will continue to stay influenced by USD price dynamics, while US fundamentals, scheduled on NA trading session, will also be able to bring some impetus to the pair.
The main events of the day:
EU CPI – 12.00 (GMT +2)
BoE Interest Rate Decision – 14.00 (GMT +2)
Philadelphia Fed Manufacturing Index – 14.30 (GMT +2)
US Building Permits – 14.30 (GMT +2)
US JOLTs Job Openings – 16.00 (GMT +2)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.0553 R. 1.0829
USDJPY S. 112.08 R. 115.52
GBPUSD S. 1.2079 R. 1.2413
USDCHF S. 0.9908 R. 1.0152
AUDUSD S. 0.7497 R. 0.7825
NZDUSD S. 0.6871 R. 0.7135
USDCAD S. 1.3172 R. 1.3548
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