FOREX NEWS: US DOLLAR ERASES LOSSES. SUPPORT TARGETED
EUR/USD
Forex News: The pair climbed before the Federal Funds Rate release, on the back of disappointing values for the U.S. CPI and Retail Sales. However, the Fed increased the rate to <1.25% as expected and Fed Chair Yellen was mostly hawkish during her Press Conference, so the US Dollar erased most of the previous losses.
Technical Outlook
The resistance at 1.1280 was breached yesterday but the bulls couldn’t break the barrier at 1.1300 and a hawkish Yellen press conference fuelled the greenback, erasing almost all losses. Strictly from a technical point of view, the pair is showing clear rejection at 1.1280 resistance and this makes the short term bias bearish. If the pair remains below 1.1240 and below the 50 period Exponential Moving Average, we expect a break of 1.1170.
Fundamental Outlook
The pair will not be affected by major economic indicator releases today, so the main focus will be on the technical aspect. The impact of yesterday’s events will likely extend to today’s trading session.
GBP/USD
Both the Pound and US Dollar were affected by disappointing data during the first part of yesterday’s trading session and this created a lot of back and forth action. Later in the day, Fed Chair Yellen’s speech was the catalyst for a move lower.
Technical Outlook
After breaking 1.2770 resistance and breaching the 50 period EMA, the pair reversed and is now trading below resistance once again. The pair remains volatile and without a clear direction but we believe that the hawkish stance adopted by Fed’s Yellen will generate additional downwards pressure. As long as the pair is trading below the Moving Average and below 1.2770 resistance, our bias is bearish.
Fundamental Outlook
The British Retail Sales are released at 8:30 am GMT, showing changes in the total value of sales made through retail outlets. Usually this indicator has a high impact, and numbers above forecast, which for today is -0.9%, strengthen the Pound.
At 11:00 am GMT the Bank of England will announce the interest rate (no change expected from the current 0.25%), along with the Monetary Policy Summary, which contains insights into the reasons that determined the rate votes. Volatility is likely to surge, especially if there’s a notable change of stance in the MPC members’ votes.