Analysis and Opinion »

19 March Forex daily review

Sergiy Zlyvko
Share on StockTwits
Published on

Major currency pairs traded until 18.00 GMT on basic scenarios. After the FOMC meeting and speech of Janet Yellen, dollar strengthened across the market.

Open Market Committee of Federal Reserve decided to leave key interest rates unchanged in the range of 0-0.25%. At the same time it was decided to reduce monthly volume of government bond purchases by $10 billion to 55 billion dollars. Thus, monthly government bonds will be redeemed on $30 billion of mortgage bonds on $25 billion dollars. Eight members of the Committee, including the head of the Federal Reserve Janet Yellen voted FOR the decisions taken. Minneapolis Fed President Narayan Kocherlakota voted AGAINST.

U.S. Federal Reserve Chairman Janet Yellen stated that the Fed refuses to anchor monetary policy to unemployment and increases the level of key interest rates in the autumn of 2015. GDP growth forecast was also lowered for 2014, 2015 and 2016 years. Upper range decreased by 0.2%. Forecast on the unemployment rate decreased by 0.2%.

EURUSD fell after the announcement of the meeting results by 100 points to the level of 1.3810. GBPUSD fell by 130 points to 1.6505. Also Australian dollar and Swiss franc fell against the dollar.

What should we expect from the market today? Economic calendar for the European session is empty so dollar can update the maximum against competitors with the advent of the European market participants. In the afternoon, we expect correction of all major currency pairs.

On Wednesday bulls could not overcome the resistance of 1.3930. By the end of the European session, EURUSD backed to 1.3915 mark. After the publication of the U.S. Federal Reserve decision and a news conference of Janet Yellen, EURUSD fell to 1.3810 by 100 points. At this event support has broken and the scales tipped to the side of the bears. Now the price on the daily chart is closer to the trend line. If today or tomorrow the euro held the price level of 1.3800, the way to 1.3685 is open. Given that the economic calendar is empty, with the opening of the European session, we expect a minimum update followed by a transition to a correctional phase. And tomorrow the pair can safely move to 1.3685 level.

Minutes of the Bank of England and the data on the labor market allowed bulls to get close to 1.6655. The pound was not supported by other currencies and the pair quickly returned to 1.6605. After the U.S. Federal Reserve meeting and speech of Janet Yellen pound fell by 130 points to 1.6505. There is no divergence between price and AO indicator, so we expect an update the minimum and rollback to 1.6595 mark. If we turn to the daily time-frame, pound broke daily trend line. This indicates that the pound after a pullback to 1.6345 could accelerate. We’re on a limited level of 1.6495 today.

U.S. Federal Reserve meeting ended and AUDUSD exchange rate lost all points earned. And then due to the crosses, AUDUSD increased. The drop was more than 100 points. Given the technical picture for the euro and the pound, we think the dollar will continue growing and Australian dollar will update the minimum.

Share on StockTwits