The U.S. dollar continues to suffer an aggressive fall as Fed kept rates on hold as expected and hinged reduction of its asset purchase program. Sterling mixed while commodity currencies are the beneficiaries of this dollar’s slowdown and recorded fresh highs.
Fed Acted as Expected but U.S. Dollar Is Plunging Severely!
The U.S. dollar hogged the limelight yesterday with its losses as Federal Reserve monetary policy statement maintained a dovish tone. They kept interest rates unchanged, as it was widely expected, and mentioned that they will normalise balance sheet relatively soon, which means that they may reduce asset purchases in September. These statements made in acknowledgement of the central bank of the below target interest rates. Following the monetary announcement, USD/JPY plunged immediately 100 pips in the next one hour, while GBP/USD pushed to reach a new 10-month high during the next hours. EUR/USD made a new record of an almost 31-month high as the absence of market news in the Euro area left the pair prone to greenback while nothing is expected in the rest of the day to limit pair’s aggressive rise.
USD/JPY – Technical Outlook
The USD/JPY pair plummeted more than 100 pips in just one trading period and slipped more than 0.6%. The U.S. dollar is completing the third bearish week against the Japanese yen and dropped below the 200-week SMA, as well as it fell beneath the three simple moving averages (50, 100 and 200) on the daily chart. The next level to have in mind is the 108.80 support barrier if there is a penetration to the downside of the 110.35 – 110.60 zone.
Remaining on the short-term timeframe, the RSI indicator is sloping slightly to the upside as the last few hours the price has an upward movement. On the other side, the MACD oscillator is strengthening its bearish attitude and is developing below the zero and trigger lines.
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