The US dollar fell against almost all major currencies after the Fed’s cautious comments. The US Dollar index, which measures green money against a basket of currencies, has now managed to regain the 95.30. The picture around the greenback has deteriorated further following yesterday’s FOMC meeting. It is expected that the US Dollar index will now remain under extra pressure in the months to come amidst a renewed neutral stance by the Fed, while the Committee did not give any hints on the potential timing for the end of the balance sheet run-off, although it is seen ending sooner than markets are forecasting.
On another front, headlines from the US-China trade talks ending today could bring in some fresh volatility to the buck’s price action.
The greenback sold off post-FOMC on Wednesday and is now holding on to the critical 200-day SMA in the 95.30/25 band. This region is reinforced by the proximity of the 61.8% Fibo retracement of the September-December up move at 95.30.
At the moment, the pair is losing 0.10% at 95.31 and a breakdown of 95.16 (low on January 31) would aim for 95.03 (2019 low on January 10) and then 94.79 (monthly low on October 16, 2018). On the other hand, immediate resistance emerges at 95.90 (21-day SMA) seconded by 96.13 (100-day SMA) and finally 96.22 (38.2% Fibo of the September-December up move).
EUR/USD technical analysis
The dynamics of the US dollar will drive the sentiment in the pair EUR/USD in the very near term, showing some upside potential in response to the now neutral stance from the Federal Reserve.
However, fundamentals in the euro region are not something to write home about and this carries the potential to weigh on the single currency in the next months.
The pair EUR/USD rallied yesterday after the Fed signaled it will be patient with regards to future adjustments on interest rates. The pair emerged above the resistance (now turned into support) barrier of 1.1450 USD to eventually hit resistance near 1.1515 USD overnight.
At the moment, the pair EUR/USD is gaining 0.05% at 1.1485 USD facing the next up barrier at 1.1514 USD (high on January 31) seconded by 1.1515 USD (50% Fibo of the September-November drop) and finally 1.1569 USD (2019 high on January 9). On the flip side, a breakdown of 1.1446 (100-day SMA) would target 1.1388 (55-day SMA) en route to 1.1323 (200-week SMA).
USD/JPY technical analysis
The Japanese yen is stronger following the newly ‘patient’ Fed, with the USD/JPY pair down to 108.51 JPY this Thursday, its lowest in over two weeks. The pair is down for the second session in a row, accelerating the decline in response to the now neutral message from the Federal Reserve at yesterday’s meeting.
From a technical point of view, the pair USD/JPY is bearish, as an attempt to recover was capped by sellers aligned around 109.05, a major Fibonacci resistance.
In the 4 hours chart, the 100 SMA converges with the mentioned level, while the 200 SMA keeps heading lower above this last, currently at 109.80 JPY. Technical indicators have extended their slides, with the RSI currently at 31 and without signs of exhaustion, indicating that additional declines are likely, particularly if the pair breaks below 108.30 JPY, the 50% retracement of the latest bearish run and the immediate support.
A breach below 107.77 JPY (low on January 10) would aim for 107.31 JPY (monthly low on September 8, 2017) and then 105.55 JPY (monthly low on February 16, 2018).
On the other hand, the next up barrier aligns at 108.94 JPY (21-day SMA) followed by 109.39 JPY (10-day SMA) and then 109.99 JPY (2019 high on January 10).
GBP/USD technical analysis
During the previous trading session, the British Pound appreciated against the US Dollar to 1.3120 USD. On Thursday morning, the rate was trading between the 55-hour and the 100-hour simple moving averages at the 1.3134 USD area.
In regards to the near-term future, the rate will surge upwards to reach the 50.00% Fibonacci retracement level at 1.3163 USD. Afterward, most likely, the 50.00% Fibo will retrace the rate to push it to trade sideways at the 1.3120 USD level.
On the other hand, the 100-hour simple moving average could resist the British Pound to depreciate against the US Dollar to the weekly pivot point at 1.3084 USD.