The dollar rebounded today against all major currencies as tomorrow’s FOMC Meeting comes into focus. This price action started early on poor reads from UK inflation and German and Eurozone Sentiment data. The equity market stabilized from yesterday’s bloodbath causing less demand for safe-haven assets; the yen saw weakness along with Treasuries and gold. The Aussie which had its worst two-day slump on Friday and Monday since the Brexit vote continued lower.
The Canadian managed a lower but inside session. The strength in crude oil helped it battle additional weakness. On the technical side for the four major currencies we discuss each day only the Euro violated any key levels. Settling below key support at 1.2340-1.2349, it closed below a trend line from the January lows as well as an additional indicator we watch closely. This technically opens the door for the bears in the near term in what promises to be a volatile session tomorrow.
The day kicks off with jobs data out of the U.K. at 4:30 am CT. There is a German 10-year Bund auction at 5:35 am CT. After a bare economic data calendar for the U.S. to start the week, Existing Home Sales is due at 9:00 am CT. Of course, tomorrow is all about the FOMC Meeting and we request that you defer to our Tradable Events this Week to gather our take on what we expect.
However, what it does come down to tomorrow is the dot plot and new Fed Chair Jerome Powell’s first post-meeting press conference. Will the dot plot stick to a median estimate of three hikes this year or will the Fed have enough members on board to squeeze out a fourth?
We do not believe this is doable given recent inflation data and the fact that two members voted against a rate hike in December. However, Goldman Sachs said otherwise in a note they put out today. The meeting concludes at 1:00 pm CT and Powell’s presser is at 1:30. We encourage anyone to give our trade desk a call tomorrow ahead of the meeting to discuss any trade ideas, details or risk management strategies at 312-278-0500.
Euro
Bias: Bullish/Neutral
Resistance: 1.2394*, 1.2449**, 1.2504***, 1.2547**, 1.2659***, 1.2725****
Pivot: 1.2340-1.2349
Support: 1.2254***, 1.2040-1.2079***
Yen
Bias: Bullish/Neutral
Resistance: .9491-.95415****
Pivot: .9459
Support: .9382-.9391**, .9310***
Aussie
Bias: Neutral
Resistance: .7757-.7794***,.7843-.7844**, .7924**, .7972-.7986***, .8035**
Pivot: .7691
Support: .7651-.7652**, .7501***
Canadian
Bias: Neutral/Bullish
Resistance: .77075***, .7818-.78265***, .7886-.7902***
Support: .7550***
About the Author
Bill Baruch is President and founder of Blue Line Futures, a leading futures and commodities brokerage firm. Bill has more than a decade of trading experience and focuses on developing trading strategies for both long and short-term trading approaches. Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER. Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications. Blue Line Futures offers five research reports each day with the Blue Line Express