The US dollar moves close to its two-week low on Thursday after the Federal Reserve confirms its monetary policy, which aims to help the economy. Meanwhile, the British pound remained stable after European leaders extended the deadline for Brexit to the end of October.
The US dollar lost momentum and the US dollar index, which measures the strength of the greenback against six major rivals, moved near a two-week low after latest Fed’s meeting minutes confirmed that the central bank will not raise interest rates this year. The US dollar index remained at 96.93 points on Thursday, slightly higher than the two-week low of 96.823 points reached on Wednesday.
The US consumer data released Wednesday also added nuances to the mixed picture, showing that annual consumer price inflation fell to 2.0% in March after rising slightly on an annual basis last month compared to February 2018.
The US dollar wiped out its earlier earnings against the Euro, caused by the European Central Bank (ECB) President Mario Draghi speech, who stressed on Wednesday the rising risks faced by the Eurozone economy. The ECB kept its monetary policy unchanged, as expected, but as an argument, Mario Draghi noted that the economic data is weak.
The Euro stood at 1.1276 USD, retaining its slow upward trend against the US dollar. Since the beginning of the week, the single European currency reported an increase of 0.52%, which will be his first weekly profit in four weeks if this increase is maintained.
Yesterday, the EUR/USD currency pair re-tested the lower boundary of the short-term ascending channel at 1.1232 USD and jumped to the resistance of 1.1281 USD. If the given resistance level holds, most likely, the exchange rate steps lower to the support level formed by a combination of the weekly R1 and the 100-hour SMA at the 1.1254 USD mark.
On the other hand, the pair could use the support of the 55-hour SMA at 1.1269 USD and breach the given resistance. Also, today’s the US PPI data release on 12:30 GMT could push the Euro to appreciate against the US Dollar to the upper channel line at 1.1300 USD.
The British pound rose slightly to 1.3097 USD, remaining in a triangle between 1.2945 USD and 1.3380 USD since the beginning of last month.
The pound did not react significantly after the EU postponed the deadline for Brexit for a second time in less than a month, coinciding with the market expectations that Britain would not leave the union on Friday without a deal.
However, the EU leaders’ decision did not clarify how, when, or whether Britain would leave the EU at all, and this also affected the stable pound.
Тhe GBP/USD exchange rate tried to surpass the resistance line located at 1.3119 USD. Given, that the rate is supported by the 55-, 100– and 200-hour SMAs, currently located in the 1.3067/1.3089 range, it is expected, that rate trades sideways between the weekly PP at 1.3075 USD and the given resistance line.
If the given support cluster does not hold, it is likely, that some downside potential prevails in the market, and the currency pair tries to surpass the psychological level at the 1.3040 USD mark.