US dollar rises after Fed interest rate decision
The US dollar rose while stocks fell after the Federal Open Market Commission (FOMC) delivered its first interest rate decision of the year. As widely expected, the Fed left interest rates unchanged at the range of between 0% and 0.25%. The bank also left the quantitative easing policy at $120 billion. In the press conference, Jerome Powell warned that the current rate of recovery will start to slow due to the ongoing wave of the virus. Later today, the dollar and US stocks will react to the first reading of the US GDP data.
The price of crude oil remained steady after the surprise inventory data by the Energy Information Administration (EIA). In its weekly report, the agency said that oil stocks declined by more than 9.9 million barrels last week. This was the sharpest decline since September last year. It was also lower than the expected increase of more than 430,000 barrels. A day before, data by the American Petroleum Institute showed that inventories fell by more than 5 million barrels.
The euro declined against most currencies after weak consumer confidence data from Germany and France. Earlier this week, the ifo Institute also published weak business confidence numbers from Germany. It attributed this weakness to the rising number of coronavirus cases in the country and abroad. Today, the European Commission will publish the latest consumer and business confidence numbers from the Eurozone. Also, the German statistics agency will publish the preliminary inflation data from the country.
The EUR/USD pair declined to an intraday low of 1.2095 after the Fed rate decision. This price is lower than the week's high of 1.2105. On the four-hour chart, the price has moved below the dots of the Parabolic SAR indicator and the 25-day weighted moving average. Also, the Relative Strength Index (RSI) has moved below the oversold level of 30. Further, the pair has moved below the recent channel, meaning that bears have prevailed. Therefore, the pair will likely continue falling today as bears target the next support at 1.2050.
After weeks of rising, the GBP/USD started falling during the European session. The losses accelerated after the Fed decision, pushing the pair to 1.3650. On the four-hour chart, the price moved below the 25-day EMA while other oscillators have continued to fall. Like the EUR/USD, this is a sign that bears have started to prevail. Therefore, the pair will likely continue falling, with the next key support being at 1.3640.
The AUD/USD pair dropped in overnight trading partly because of the strong US dollar. It fell to an intraday low of 0.7630. On the four-hour chart, the pair moved below the 15-day and 25-day EMA. It has also fallen below the important support at 0.7660. Also, the Relative Strength Index (RSI) has moved close to the oversold level. Therefore, the pair will likely continue falling as bears target the next support at 0.7600.