U.S. Dollar stronger after FOMC meeting – USD/JPY records a new 6 year high

The U.S. Dollar pushed higher against the majority of major currencies as Federal Reserve’s statement repeated that interest rates will remain to all record lows for “considerable time”. This normally would have been a U.S. Dollar unfavorable event, but traders weighed more importance on the indication that as soon as the FED starts raising interest rates this will be done on a faster pace.

USD/JPY traded to new 6-year highs to recorded high this morning at 108.85 levels, a level not seen since August 2008. The pair has gained an increased traction after the break of the resistance at 105,43 last week, and is now looking to challenge year 2008 highs at 110.59. In a short-tem outlook the pair looks well into an overbought area, with RSI oscillator at the daily chart above 85 levels, therefore we might need some consolidation time for the pair to move further higher.

EUR/USD initially traded higher at the time of the FOMC announcement, trading is as high as 1.2979. However it quickly retreated and traded below yearly lows, down to 1.2833 this morning, a level not seen since July 2013. As indicated yesterday in our comment, the pair looks ready for a break out lower with support levels to be found around 1.2830 areas and 1.2755 thereafter.

U.S. Dollar was bought against the Aussie dollar as well driving the exchange rate below weekly lows, and near 6-month lows. The pair this morning is trading down to 0.8945, recording a 1.65% loss for the day. Support area still remains intact down to 0.8887.

Sterling on the other hand recorded a highly volatile day, with the Scottish referendum taking off this morning and the poll results are expected to be announced early hours tomorrow. Latest polls showed an advantage to “no” voters that drove the GBP higher especially against the Euro. We expect volatility to pick up within the day as uncertainty mountains, and the decisive result nears by. Any predictions are hard to made, but technically if a “no” vote prevails GBP/USD should move towards monthly opening at 1.6570 and if the outcome is for a “yes” vote we shall expect support levels to come into play down to 1.54-1.56 area.

Economic calendar is light today, therefore a chance is given to absorb the FOMC statement and prepare for the Scottish vote outcome.

Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.