18 March Forex daily review
As we have expected, the dollar index DXY on Tuesday in anticipation of the FOMC meeting remained sideways and closed near 79.40 mark. A similar situation was observed for EURUSD. GBPUSD in anticipation of the Bank of England minutes publication reduced to 1.6545. To the end of the day the pound rebounded to 1.6595.
Key events today: BoE Minutes (9.30 GMT), employment data in the UK (9.30 GMT), the speech of the SNB’s Thomas Jordan and meeting of FOMC (18.00 GMT). Following the meeting, the Fed chief Janet Yellen at 18.30 GMT holds her first press conference. It is expected that the regulator once again will reduce quantitative easing program by $10 billion to 55 billion dollars.
Forecast on major currency pairs is made before the end of the European session. At the trading in Europe swings in EURGBP and GBPUSD are expected. We inclined to think that until 18.00 GMT pairs manage to stay at current levels. Given temporal analysis, the main pairs are ready to breakout formed bands. Most likely, the breakout will be after 18.00 GMT or on Thursday.
EURUSD after falling to 1.3880 recovered to 1.3930. Four days EURUSD traded sideways. Bulls are preparing to punch 1.3965, but act as a deterrent FOMC meeting. It is necessary to pay attention to the Bank of England minutes and employment report in the UK. They will have an impact on EURGBP cross an on the main EURUSD pair. We are inclined to think that EURUSD to 18.00 GMT will trade at around 1.3900. By the time the euro is ready to go out of range and the FOMC meeting could become a driver for strong movements in the range of 70 points.
British pound dropped to 1.6545 yesterday. The pair rebounded from 1.6640 mark. Perhaps the market is already priced protocols of the Bank of England and now it is waiting for data on the labor market. EURUSD held near the upper limit range of four last days. GBPUSD in the last four days formed downward movement and the trend line currently passes through 1.6590. Whether GBPUSD strikes the range will depend on the data and reports the Bank of England. Given that the U.S. Federal Reserve in the evening will announce the decision on QE3 program, then by 18.00 GMT we expect a return to 1.6585. Market is ready for sharp fluctuations and market participants expect resembling events, which can strongly deviate from 1.6620 price level.
Crosses on Tuesday supported the Australian dollar, causing the pair rose to 0.9135. We were not ready for such eventuality, so the outlook is canceled if the pair rises above 0.9100. Let’s try on Wednesday to consider a rollback to the trend line, but so far we do not understand why, after the publication of RBA minutes traders prefer buying AUD.
USDCHF rate reached a settlement goal and now again trading at around 0.8745. Today before the European session we will try to address the scenario yesterday. Market on time ready to strong fluctuations, so today the breakout from the range between 0.8700 and 0.8770 is expected.
Sorry. No data so far.