Forex snapshot

Yesterday’s Monetary Policy Committee and Federal Open Market Committee statements continue to drive the price action of sterling and US dollar, while today’s latest Eurogroup meeting could give the euro a sense of direction.

Euro and US dollar notes being counted
Source: Bloomberg

EUR/USD heads North after FOMC statement

The last week's efforts to break below the intraday low set during Mario Draghi’s speech has proven to be a step too far, as the euro has once again strengthened against the US dollar. The 50-day moving average is at $1.3700 and the 200-DMA is trading at $1.3680, so there is still a little upside before natural resistance is hit.

As expected, the US Federal Reserve confirmed that it would cut a further $10 billion from its monthly debt purchasing scheme. There was a distinct dovish tone to the statement that saw the US dollar weaken against a plethora of major currencies.

The short term would point towards higher levels, however traders should be conscious that the European Central Bank is likely to try and talk down euro strength.

FOMC statement forces GBP/USD above $1.7000

The dovish statement and further reduction to the debt purchasing scheme in the US has finally seen cable set a new five-year high. As my colleague David Madden pointed out, currency traders are still trying to piece together the thoughts of Mark Carney and the rest of the MPC voting members as they have tried to alter the markets preconceptions of interest rate rising timelines.

The last 48 hours has seen the minutes reveal the MPC’s surprise that markets had ruled out an interest rate rise in 2014; of course they still all voted 9-0-0!

If GBP/USD can close above $1.700 there could be considerably more upside especially if the Bank of England does raise interest rates.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.