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Dollar firm despite FOMC silence on rate hikes

In spite of markets anticipating a step in the direction of a possible interest rate hike, the Federal Open Market Committee remained cautious and favoured a wait-and-see approach. This didn’t spur dollar bulls as the greenback remains well-supported.

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.
Euro notes
Source: Bloomberg

Euro bounce short-lived

EUR/USD is trading at $1.1296, up 0.16% at the London open following Wednesday’s statement from the FOMC, which despite not alluding to any bullish signals for a rate hike saw dollar pairs remain relatively firm. The overriding rhetoric from the FOMC was very much a continued policy of patience in regards to an interest rate hike.

The FOMC also went on to reaffirm that a rate hike will be very much led by economic data. EUR/USD has continued to reverse from its $1.1423 high (27 January) breaking momentarily below key downside support at $1.1291. Price action is currently trading around this level, supported higher by the pair’s 100-hour moving average level of $1.1280.

Should a sustained move below key support be seen then the next clear downside target is placed at $1.1186. However, should downside support hold then a retesting of $1.1374 should come back into play. 

Sterling remains under pressure

GBP/USD is trading at $1.5118, currently down 0.18% at the London open session on Thursday in spite of a more dovish-than-expected release from the FOMC. A wait-and-see approach remains the policy in regard to a possible rate hike, which has likely been thwarted in the short-term owing to long-term inflation dipping below the committee’s objection as a result of oil prices losing over 60% from July highs.

However, GBP/USD bears remain in control as even better-than-expected UK House Price Index results, which saw prices rise by 6.8% beating expectations of 6.6% year-on-year, were not enough to stem the bearish tide. Any upside in the short-term remains capped by its 50-hour moving average (currently trading at $1.5163). If held, we are likely to see a retesting of current support at the 200-hour moving average at $1.5108.

Should downside support fail to hold then the next clear downside target is placed at $1.5079. However, should $1.5108 offer support then a reversal back up to test resistance at the 50-day moving average is likely. 

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CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.