Forex Video Briefing (7/30) – EUR/USD, GBP/USD, USD/JPY Reactions after the FOMC Statement
EUR/USD has been bearish throughout July as you can see in the 4H chart, falling from 1.37 to about 1.3370 today before the market found support. While the FOMC statement itself was not hawkish, the fact is that strong data is making the Fed respond by trying to convince the market not to expect good data to translate directly to a rate hike. Essentially, today’s statement might slow down the USD but not reverse it. In the short-term, we can expect the EUR/USD to consolidate with upside risk toward the 1.35-1.3510 area, but there is still downside risk to the 1.3295-1.33 low from Nov. 2013.
GBP/USD was bearish in July after establishing a high on the year at 1.7190. Again, after the FOMC statement, USD-stalled, and GBP/USD found support around 1.69, though it cracked this level earlier in the session. If you look at the daily chart, GBP/USD is still bullish as it holds above its 2014-trendlines and is still trading above the 100-day SMA. We are at a level where both a bullish continuation and consolidation mode would call for at least a short-term bullish attempt. We should first look at the 1.70 level, this week’s high, as resistance, maybe with elbow space up to 1.7050 which is in a general support/resistance area. However, if price moves above 1.71, it is likely in bullish continuation. If GBP/USD stays in consolidation, and breaks below 1.69 would break below the 2014-trendlines and open up the 1.67 lows from May.
The USD/JPY broke above a descending triangle resistance earlier after the better-than-expected US GDP data for Q2. However, after the FOMC statement, USD/JPY is stalling at a common resistance area for April through June. Again, today’s FOMC statement can hold USD back in the short-term, but if USD/JPY comes back to the 102.00 area, look for buyers. A break below 102 can return the focus toward the 101-101.10 lows in July, as well as the 100.75 low on the year. However, if price can stay north of 102, it is poised to push at 103, and open up the 104-104.13 highs in March-April.