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20 March Forex daily review

Sergiy Zlyvko
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On Thursday, the U.S. dollar closed up to its competitors, receiving support from the last meeting of the Federal Reserve System in the USA, as well as positive economic data on the U.S. Movement on all major currency pairs almost coincided with the forecast scenarios.

This day is empty on important macroeconomic events. When there is no breaking news, technical analysis works, and market participants may use any news as a driver.

From current levels on Friday, we wanted to see the dollar rising to a new high. This model we know as Double divergence. So after a sharp rise or fall of the rate, the price moves in the direction of the initial pulse. If the dollar index will go to 80.55 mark, we’re right. But we think that with the growth, which should begin with the opening of the European session, the fall will be later. As a result, the dollar index will not be able to break the maximum and return to 79.80.

On Thursday, the euro weakened against the dollar to 1.3750 and then rebounded to 1.3785. Let’s look at the chart, where AO indicator is near the zero line, AC is on top (two highs), CCI is preparing to cross the level of 100. Indicators inform about the sales of the euro, but USDCHF broke the limit of the upward channel for the model of three vertices. Now the main scenario we consider the reduction to the area of 1.3755 level and then fall back to 1.3825. The target is situated at 1.3725. If EURUSD on Friday will be in the range of 1.3705-1.3755, then on Monday the pair will consider breaking through 1.3725.

The situation is similar for GBPUSD. As expected, British pound fell to 1.6490 mark and moved to a correctional phase. Hourly indicators indicate a decline of the pound in the first half of the day, but beware there are risks for a sharp rebound from 1.6490. We want to see the fall today to 1.6440, but the franc and the Australian dollar was trading mixed in Asia than indicate that a correction to 1.6545 and higher is followed. Pound yesterday fell less than the euro, as the decline of the pair pent up by demand for the British currency in the EURGBP and GBPJPY pairs.

AUDUSD exchange rate in the European session updated the minimum and from 0.8995 mark bounced to 0.9065 on Asian trading session. At 8.45 GMT the rate is 0.9080. Pair decently rolled by crosses and the main scenario for Friday is the decrease expected to around 0.9025. In the first half of the day the decline to 0.9020 is expected for AUDUSD.

Swiss National Bank on Thursday reiterated the promise to make an intervention to prevent the strengthening of the franc and the fall of EURCHF below 1.2000 level. In European session, USDCHF rose to 0.8870 and ended the day with a rebound to 0.8835. We can assume that without any news, USDCHF rate can return to 0.8860 on Friday and closes near 0.8830.

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