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Trading Outlook for USD-pairs, Cross-rates Ahead of FOMC

Trading Outlook for USD-pairs, Cross-rates Ahead of FOMC

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Today is the FOMC meeting, no rate hike expected, it will be about Fed language. Several USD-pairs put in bearish reversal bars last week, but showing no follow-through, suggesting more USD weakness. A couple of cross-rates are piquing interest.

Technical Highlights:

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USD-pairs no follow-through on forceful rejections, trends remain intact

Later today, we have the FOMC announcement, with very little expectation of a rate hike this time around. Next likely time is in March. Today will be about Fed language, so volatility could still flare up. For live coverage of the FOMC announcement, join Chief Strategist, John Kicklighter, starting at 18:45 GMT time.

EUR/USD put in a forceful bearish reversal-bar last week around the 2008 trend-line, but has found no follow-through since. The consolidation after such an event suggests it will at least try and make a run at a new high. If, however, we see another reversal soon, it could be solid confirmation of the prior reversal and usher in lower prices.

GBP/USD is doing similar, but with a little less clarity. The rend overall remains higher and as long as 13980 holds, so does a neutral to upward bias. AUD/USD and NZD/USD were both rejected at key long-term resistance zones, but are in the process of negating those bars from last week. Aussie has good trend-line support as it heads further into a zone extending back to 2010.

Chart 1 – AUD/USD

audusd daily price chart

USD/JPY is putting in another wedge on the 4-hr, with room to run still to the 2012 trend-line. It’s a big line of support, so a reaction could take place should it drop down under 10800. USD/CAD is trading around a trend-line dating back to 2012, with about 20 or so points to firmly test it. Worth keeping an eye on in the mid-12200s.

To see how retail traders are positioned and what it might mean about future price fluctuations, see the IG Client Sentiment page.

Chart 2 – USD/JPY: 4-hr

usdjpy 4-hr price chart

EUR/JPY is turning higher off support which comes in by way of a range which developed during last quarter. As long as yesterday’s low at 13413 maintains, so does an upward bias. AUD/NZD still has the big-picture set-up we discussed not long ago, but will take time for support and the neckline of the head-and-shoulders pattern to break; close below 10824 viewed as likely to kick off a bigger slide.

Chart 3 – EUR/JPY: Daily

eurjpy daily price chart

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---Written by Paul Robinson, Market Analyst

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.