Following the FOMC’s decision to raise interest rates by 25bps, the US dollar plummeted lower and the EUR aggressively advanced. While this is not the ‘expected’ reaction to such an outcome, we believe the market wanted somewhat more of a hawkish response from the Fed Chair, which did not transpire. Furthermore, we feel the dollar was further weakened by the ‘dot plot’ scenario that has showed little change since December.
Thanks largely to yesterday’s rally, weekly bulls look to be on course to connect with the weekly resistance at 1.0819, followed closely by the 2016 yearly opening level at 1.0873. Looking down to the daily candles, price ran through the top edge of daily supply at 1.0714-1.0640 (now acting support area) yesterday, and now looks free to challenge the above noted weekly resistance and nearby daily resistance at 1.0850.
While the higher timeframes suggest further buying may be on the cards, H4 action is currently seen teasing the underside of a H4 supply zone coming in at 1.0753-1.0734. A break above this hurdle could lead to a continuation move north up to the H4 supply at 1.0797-1.0780, which happens to be shadowed closely by Feb’s opening level at 1.0801 and the 1.08 handle.
Our suggestions: Despite higher-timeframe direction pointing to a move north, we are not going to be buying into a H4 supply zone! A break above this area, however, would likely call for a move north up to the next H4 supply at 1.0797-1.0780. A short from here is a little more appealing given that it fuses closely with Feb’s opening level at 1.0801, the 1.08 handle and a possible H4 AB=CD (black arrows) bearish formation taken from the low 1.0525. However, there’s still a good chance that this H4 supply zone area will be faked considering that the weekly resistance is sited just above at 1.0819. Therefore, we would need to see the fakeout before looking to short here as this could prove to be a monster trade!
Data points to consider: US housing data, Philly Fed manufacturing index report alongside the US jobless claims figure at 12.30pm GMT.
Thanks largely to yesterday’s rally, weekly bulls look to be on course to connect with the weekly resistance at 1.0819, followed closely by the 2016 yearly opening level at 1.0873. Looking down to the daily candles, price ran through the top edge of daily supply at 1.0714-1.0640 (now acting support area) yesterday, and now looks free to challenge the above noted weekly resistance and nearby daily resistance at 1.0850.
While the higher timeframes suggest further buying may be on the cards, H4 action is currently seen teasing the underside of a H4 supply zone coming in at 1.0753-1.0734. A break above this hurdle could lead to a continuation move north up to the H4 supply at 1.0797-1.0780, which happens to be shadowed closely by Feb’s opening level at 1.0801 and the 1.08 handle.
Our suggestions: Despite higher-timeframe direction pointing to a move north, we are not going to be buying into a H4 supply zone! A break above this area, however, would likely call for a move north up to the next H4 supply at 1.0797-1.0780. A short from here is a little more appealing given that it fuses closely with Feb’s opening level at 1.0801, the 1.08 handle and a possible H4 AB=CD (black arrows) bearish formation taken from the low 1.0525. However, there’s still a good chance that this H4 supply zone area will be faked considering that the weekly resistance is sited just above at 1.0819. Therefore, we would need to see the fakeout before looking to short here as this could prove to be a monster trade!
Data points to consider: US housing data, Philly Fed manufacturing index report alongside the US jobless claims figure at 12.30pm GMT.
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