Good morning traders.
Quick update to FOMC. On the whole Powell stood firm yesterday. No cuts directly mentioned but with a dovish tone to the language of the statement and presser that should things change the Fed will act. The markets have taken the view that central banks are switching to easing mode, rate cuts are coming and stocks rallied overnight. Whether the knee jerk interpretation of the Fed stance will sustain risk and a lower USD is open to question. But there’s no indication yet that anything is about to stall the BTFD risk on plan
Maybe they will still cut in July (the market seems to be pricing in cuts this year) but on the face of it there is some feeling that the Fed might be behind the curve. Maybe a sudden bout of risk off will stir them more quickly into the action Trump (and to be fair others) want.
I guess a China trade deal now is increasingly important to keep up the markets for President Trump to go into his re election campaign with stocks at all time highs :). Perhaps Powell is also waiting for the outcome of the G20 meeting.
In summary – Powell didn’t quite spark the kind of lift off Draghi got in EU indices and that’s not going to go down too well with his ´boss´ :). However, for today risk assets appear to be bid and the USDx is back below the 97.00 level helping lift the eurusd.
The Daily chart
As I write we are right back at the mid point of the swing low and again tagging the downward sloping trend line we have had on the chart for some time. If the market continues to price in US rate cuts then it suggests higher prices for the eurusd with an initial test of the 1.13 level being the first logical port of call.
The Hour chart
Levels as per.
Have a good one :).