The USD was trading weaker on Wednesday after the FOMC meeting yesterday saw the Federal Reserve leaving interest rates unchanged. The Fed also signaled no rate hikes this year according to the dot plot projections. As expected, they also cut economic projections with the US GDP now forecast to rise just 2.1%.
EURUSD Reaches a 6-week High
The euro tested a six-week high earlier today, adding to the 0.66% gains made by yesterday’s close. Economic data from the eurozone was spare, with only the German PPI reporting coming out. Producer prices fell 0.1% missing estimates, but the news did not impact the currency at all.
Can the Euro Maintain the Gains?
The common currency broke past the major trend line in the early Asian trading session today. The break of the trend line saw price action turning a bit subdued near the top. Given the nature of the breach of the trend line, it is not quite convincing as yet. Therefore, the euro could pull back in the near term. A close below the trend line may see the EURUSD retesting 1.1394 level.
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Risk Appetite in Check as Yen Rises
The Japanese yen rose sharply yesterday, gaining 0.68% on the day. This reflects the market’s risk appetite. UK Prime Minister May wrote a formal letter to the EU seeking a delay to the country’s exit from the EU. The UK is expected to leave the EU on March 29th. The extension will be discussed at the EU parliament today.
Will USDJPY Extend Declines Further?
Following the breakdown of prices near 111.40 level of support/resistance, the USDJPY currency pair fell sharply. This has sent prices close to testing the rising trend line from the lows of early January this year through the end of January. We can anticipate the USDJPY to briefly breach the trend line and test the lower support at 109.84 level in the short term. But we can rule out further gains below this support for the moment.
Gold Jumps on Fed Minutes
Gold prices rose 0.57% on the day, extending the gains for four consecutive daily sessions. The gains came as the Fed signaled that it would keep interest rates steady at its meeting yesterday evening. Ahead of the Fed meeting, gold prices maintained a steady upside.
What is the Next Target for XAUUSD?
With the current bullish momentum, gold prices will most likely target the 1320 – 1322 level of resistance. This would mark a retest of this level which served as resistance previously. A reversal off this level is required in order to confirm the resistance. In the near term, any pullbacks ahead of the rally to 1320 – 1321 will be seen as bullish in the short term.