Those, who expected high volatility after FOMC session, were right. Daily trading range exceeded all expectations. Our forecast that any outcome of the session would be used for dollar’s correction was accurate. The content of the final communiqué was slightly tightened – the phrase about “patience” in increase of rates was eliminated. However, it was predictable, so it didn’t impress anyone much. Decreased forecasts on inflation as well as on economic growth were critical for dollar. This very fact provoked mass fixation of dollar’s long positions, which was strengthened by worked stops.
Today trades in the exchange market will pass under the impression of yesterday’s FOMC session. After a certain time-lag it’s worth studying the final communiqué and the speech of Janet Yellen more carefully. For last months fundamental reasons of dollar’s strengthening haven’t changed – in any case the Fed will move towards normalization of monetary policy, while most other economic centres will conduct soft policy. So, there is a high probability of renewed trend of dollar’s growth after consolidation.
The highest uncertainty of this day is SNB session on monetary policy. It is worth remembering that in January they made Armageddon in the exchange market by unbinding Swiss franc from euro. Obviously, the probability to get into hot water for the second time in a row is extremely low. Still, problems of the Eurozone make Swiss regulator to search for uncommon ways to save the stability of own economy.
Unfortunately, we were unlucky – yesterday euro didn’t go below 1.0500, our buy order failed to trigger. We decided not to buy from 1.0600 because of high risks. So, we just observed this feast. Now we have to wait till the market calms down and go back to normal. For today we can suggest considering EURUSD sale above 1.1000, with stop 1.1250. The range 1.1000 – 1.1200 will be determining for retaining of current trend.
Any opinions, advice, news, research, analyses, prices or any other information presented on this webpage is provided as general market commentary and does not constitute investment advice. "Vector Securities" shall not be liable for any loss, including loss of profit, which may arise directly or indirectly from the use of this information.