U.S. dollar appreciated from the hawkish stance of Fed policymakers putting Gold under pressure which dropped more than 1.5% since yesterday towards our target at $1,240. Eurozone’s GDP came out as expected and left the euro unaffected while today Markit PMIs are in focus.
Fed Left Rates Unchanged, Recognised Q1 Slowdown But USD Shored Up
The U.S. dollar has been pretty upbeat against its counterparts on Wednesday and early Thursday as Federal Reserve Committee agreed to left the funds rate unchanged at 1% in the policy meeting ended yesterday. Even though the policymakers recognized the slowdown of the economy in the first quarter, they characterized it “transitory” and stated that the labour market is still strengthening, ignoring the surprisingly small non-farm payrolls number for the month of March. The employment report coming out tomorrow will probably have better figures than the previous. The ADP employment change rose to 177K in April, slightly above 175K expected, but below last month’s figure which revised downward to 255K. The ISM non-manufacturing PMI surpassed above both the forecasts and the previous print and went up to 57.5. Services sector had also an above predictions expansion in April according to the Markit PMI signaling a strong NFP on Friday.
strong>USD/JPY – Technical Outlook
The U.S. dollar traded sharply higher versus the Japanese yen over Wednesday’s trading session as it rose 0.7% in just one day. The USD/JPY pair posted a six-week high and almost challenged our recommended target at 112.90 strong resistance barrier. The 100-daily SMA was a strong obstacle for the bulls, however, the pair jumped above it and now is approaching the 113.50 resistance barrier. On the other hand, a rebound on the descending trend line which is holding since December 2016 is possible.
The technical structure is endorsing the bullish attitude. The Relative Strength Index (RSI) is rising with strong momentum and is approaching the overbought area. Also, the MACD oscillator surpassed the trigger line and the mid-level, confirming the recent upward movement in price.
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