Its Fed day! But keep an eye on UK jobs report

March 21, 2018

By Orbex Blog

Daily Forex Market Preview, 21/03/2018

The U.S. dollar was seen pushing higher on the day reversing the gains from Monday’s declines. Investors were seen bracing for the Fed meeting due later in the day. Although the markets have fully discounted a 25 basis point rate hike, the Fed’s dot plot and economic projections will play a key role in shaping the sentiment in the USD going forward. For the moment, the markets are expecting Fed officials to play it safe with three rate hikes this year.

Ahead of the Fed meeting, the UK’s jobs data will be on the line. The three month average earnings index is forecast to rise 2.6%, slightly accelerating from 2.5% seen before. The UK’s unemployment rate is expected to remain unchanged at 4.4%.

Economic data from Tuesday included the annual inflation data from the UK. According to official reports, the UK’s headline inflation rate was seen slowing to a pace of 2.7% which was more than expected and inflation was seen easing from January’s print of 3.0%. Core inflation rate also slipped to rise just 2.4% down from 2.7% previously. The data builds up to this Thursday’s BoE meeting where the odds of a hawkish signal from the Bank of England have increased.

 

EURUSD intra-day analysis


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EURUSD 21.03.18

EURUSD (1.2262): The euro currency gave up the gains from Tuesday. A modestly stronger U.S. dollar and some weak data from the Eurozone added to the declines. The German ZEW economic sentiment fell to an 18-month low for March. However, current conditions index was seen to have remained broadly stable. From a technical perspective, expect to see some volatility in the EURUSD today heading to the Fed meeting. Following the reversal near the resistance zone of 1.2363 – 1.2333 level, we expect the common currency to maintain the range, touching down to the lower support at 1.2179. A close below 1.2179 will expose the euro toward the next lower support at 1.2090 – 1.2070 level.

 

GBPUSD intra-day analysis

GBPUSD 21.03.18

GBPUSD (1.4015): The British pound was seen pausing its rally following Monday’s news about the transitory Brexit deal. The weaker inflation data did not help the sterling much as price action was confined to Tuesday’s range. Support at 1.3902 remains in play and we expect to see this level to be tested in the near term. The UK’s labor market data will of course bring some volatility ahead of the Fed meeting. In the near term, GBPUSD is likely to maintain the range of 1.4060 – 1.3902 level ahead of the Bank of England meeting that is due on Thursday.

 

XAUUSD intra-day analysis

XAUUSD 21.03.18

XAUUSD (1313.49): Gold price was bearish yesterday as price fell to 1307.48 level as noted in Tuesday’s morning commentary. The support level is expected to hold in the near term but depending on the Fed’s outcome there is a potential for gold prices to breakout below this level. The price action touching down to the support level of 1307.48 also marks a descending triangle technical pattern. If validated, we expect gold prices to fall toward 1288.90 and potentially ease lower to the 1282 – 1274 level of support that is pending a retest. To the upside, gold prices could maintain the range within the 1307.48 level and 1328.07 level of resistance.