Morning Forex Report: Another FOMC False Start, USD Drops Fed On Hold

Market Commentary  

Fed kept rates unchanged overnight. On projections, inflation was lowered over the next 3 years; growth was lowered over 2016-17; fed fund rate expectation was also lowered by about 25bps over the same period, with negative rate expectations seen in 2016!

At the press conference, Fed Chair Yellen said that there is concern about the impact of the firmer USD and noted that net exports were a substantial drag on growth in the first half of the year. She also pointed out that inflation could remain subdued in coming months along with wage growth. Financial conditions have tightened and global outlook seems more uncertain. That said most Fed officials still expect first rate increase to occur within the year and are unwilling to require the achievement of both mandates (employment and inflation) before acting. USD was broadly weaker thanks to Fed and Yellen..

EUR jumped on broad USD weakness. EUR rose as high as 1.1441 overnight; last seen at 1.14 levels

GBP benefited at the expense of USD weakness. US retail sales were in line with expectations. GBP was last at 1.5560 levels

JPY firmer on broad USD weakness and slight risk off sentiment (US equities reversed initial gains and Fed expressed concerns with global outlook). Price action saw the pair failing to break above the 200DMA at 120.80 levels overnight.

Technical  Commentary 

EURUSD Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish

  • Range resistance breach at 1.1375 targets 1.1560 as 1.13 acts as near term support
  • Daily Order Flow bullish; OBV sideways to down, Linear Regression and Psychology retesting midpoints from above
  • Monitoring intraday price and Order Flow indicators on a test of 1.13 or 1.1550

eu2015-09-18 07_30_14-

GBPUSD: Short Term (1-3 Days): Bullish  – Medium Term (1-3 Weeks) Bearish

  • Testing range resistance at 1.56  a topside break targets 1.58. Only a breach of 1.55 would concern near term bullish advance
  • Daily Order Flow bullish; OBV sideways, Linear Regression and Psychology retesting midpoints from below
  • Monitoring intraday price action and Order Flow indicators on a test of 1.55 or 1.57

gu2015-09-18 07_35_29-

USDJPY: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bullish

  • 121.50 continues to cap topside as this level hold expect retest of 119 support a failure here opens 116.
  • Daily Order Flow bearish; OBV sideways to down, Linear Regression and Psychology testing midpoints from above
  • Monitoring intraday price action and Order Flow indicators on a test of 119 or 122

uj2015-09-18 07_38_39-

EURJPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish

  • Rejcted at range resistance 137 a topside break targets 141. While 137 contains upside expect a rotation back to test 132 bids
  • Daily Order Flow bullish; OBV sideways to down, Linear Regression and Psychology testing of midpoints from above
  • Monitoring intraday price action and Order Flow indicators at 138 or 132

ey2015-09-18 07_41_38-

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