US Dollar Down After FOMC, Bank of Japan Eyed
The US Dollar declined against its peers yesterday following the release of the FOMC announcement. First of all the central bank kept its interest rate unchanged at 0.50% as expected but failed to provide clues for a rate hike later in 2016. At the statement it was signaled that the Fed will be monitoring incoming data for the economic outlook, they indicated that inflation is below target of 2%, pressured by low energy prices, but they expect the target to be reached as the impact from low energy prices fades. The Committee expects the federal funds rate would gradually move higher based on incoming data and said that will remain below long term levels for some time. Investors could not find any clue of a possible rate hike in 2016 and that has made the US Dollar vulnerable to the bearish side.
The investors’ focus turn now to Bank of Japan Monetary Policy Statement release where it is expected for the central bank to add stimulus. However, if it is not as aggressive as expected then USDJPY would revive its bearish momentum. The currency pair found resistance at 106.55 and fell after the FOMC statement, to as low as 104.45. The Yen actually also printed some gains as NIKKEI fell by 1.13% at the same time the greenback has been weakening. We do not expect much movement until BOJ release, nevertheless risk today would be heightened during US Jobless Claims release.
The EURUSD printed gains up to 1.2% since last night FOMC release, moving again above the 1.1000 handle and has reached as of typing the resistance 1.1112. Overall in the immediate term remains in range formation with prices moving towards the upper boundary at 1.1149. The Spanish unemployment was just released better than expected at 20% down from previous 21%. The German unemployment rate and CPI data are also expected later today.
The GBPUSD bounced up to resistance at 1.3245 as the US Dollar weakened. The currency pair managed to reverse the bearish sentiment in the immediate term while in the longer term is mainly in a range. Currently is rebounding towards resistance at 1.3245, should that is breached we would expect further climb.