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US Dollar Price Action Setups After FOMC Emergency Rate Cut

US Dollar Price Action Setups After FOMC Emergency Rate Cut

James Stanley, Senior Strategist

US Dollar, EUR/USD, USD/CAD, AUD/USD, USD/JPY Analysis

  • The FOMC announced an emergency rate cut earlier today.
  • In an ironic twist, that announcement did little to stem the recent risk sell-off.
  • The US Dollar has continued to sell-off, buoying reversals/retracements in EUR/USD and AUD/USD. USD/CAD is in the spotlight for the Bank of Canada tomorrow and AUD/USD just put in a ‘rate cut rally’ on the heels of the RBA move last night.

FOMC Announces Emergency Rate Cut – Stocks Sell-Off

Coronavirus fears are running rampant and, this morning, the G7 held a conference call to discuss coordinated options. From that meeting, only a statement was provided; but shortly after the FOMC announced that they would be cutting rates by 50 basis points in an emergency move.

This provided a quick flicker of strength in US stocks but that was short-lived, and sellers came back with a vengeance to push the S&P 500 back below the 3k marker. The S&P 500 has since found support around the confluent 2985 level on the chart. The past two trading days have brought strong late-session rallies to the table: Will today bring the same?

S&P 500 Hourly Price Chart

SPX500 Hourly Price Chart

SPX500 on Tradingview

US Dollar Digs into Support

The US Dollar has put in a massive drop over the past week-and-a-half, erasing the entirety of the February rally and, at this point, almost the rest of the 2020 rally.

US Dollar Daily Price Chart

US Dollar Daily Price Chart

USD on Tradingview

EUR/USD Rockets to Resistance

Going along with the plummet in the US Dollar, EUR/USD has ridden a veritable rocketship over the past two weeks as price action has jumped by more than four big figures.

EUR/USD Daily Price Chart

EURUSD Daily Price Chart

EUR/USD on Tradingview

USD/CAD In Focus Ahead of BoC

Tomorrow brings the Bank of Canada for a rate decision: Will they join the rate cut chorus? CAD weakness has been a primary theme to work with since the January BoC outing and, of late, this has been one of my favored pairs for USD-strength.

Even with that precipitous decline in the US Dollar over the past few weeks, CAD weakness has remained a workable theme. The 1.3500 level looms large as a next level of resistance should the BoC come to the table with a cut at tomorrow’s meeting.

USD/CAD Four-Hour Price Chart

USD/CAD Four-Hour Price Chart

USD/CAD on Tradingview

AUD/USD: Rate Cut Rally as USD Weakness Reigns Supreme

The RBA cut rates last night: But you might not know that by looking at the AUD/USD sharp, as the pair has put in a sharp rally after that rate move. This is likely due to the fact that the RBA cut was well priced-in while the FOMC cut was a surprise. At this stage, there’s a bit of resistance potential from a bearish trendline projection taken from the 2020 highs; but a bit deeper on the chart is a more attractive zone for resistance plays, and that runs from .6671-.6700. This zone of prior support held the lows for the first half of February and, as yet, hasn’t been tested for resistance since the breakdown.

AUD/USD Four-Hour Price Chart

AUDUSD Four hour price chart

AUD/USD on Tradingview

USD/JPY Plummets into Possible Support

Yen-strength has come back with aggression following the sell-off from two weeks ago. As looked at in the webinar, price action is attempting to cauterize support at a key Fibonacci level, taken from around the 107.00 handle in the pair.

USD/JPY Daily Price Chart

USDJPY Daily Price Chart

USD/JPY on Tradingview

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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

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