DOLLAR UNDER PRESSURE AFTER INTEREST RATE INCREASE
Yesterday the US dollar declined after the Federal Reserve announced its decision to increase the interest rate by 0.25% but opted not to add a fourth rate increase to its 2018 forecast.
The USD declined due to expectations from market participants about the Fed's decision to hold their interest rate increase forecast for the year 2018, on the other hand the Fed boosted their 2019 forecast from two increases in a year to three in 2019. The Fed also signaled that they might increase the rate at a more aggressive pace in coming years to keep up with the strengthening economy.
Concerns about the increase in trade barriers that they may hurt the economy also played an important role in the US dollar’s decline, as late today it is expected that the Trump administration plans to release a package of proposed measures aimed at China that includes trade tariffs on imports of at least 30 billion US dollars.
This week employment data shows that the number of Americans seeking the unemployment benefits rose slightly against last week but is hovering around decades low which suggests a firm labor market. The previous week’s initial jobless claims rose 3000 to 229,000. Weekly jobless claims have remained below 300,000 for about three years now, which is the longest streak since 1970.
Later today, UK data showed the rebound of retail sales in February, but the underlying picture remained weak which signaled that British consumers are cautious at the start of 2018. In February sales grew by 0.8% as compared to the decline in January, data indicates all retail sectors saw growth.
EUR/USD is expected to trade with a bullish outlook. The pair encountered heavy buying yesterday after the Federal Reserve statement. currently it is trading with a bullish bias. The relative strength index is declining but it's decline should be limited. Yesterday's low 1.22412 plays a major support role; as far as the price remains above 1.22412 (yesterday's low), look for upside target at 1.23878 (today's high) and 1.2425.
NZD/USD is expected to trade with a bullish outlook. The pair is still showing upward momentum after a breakout from a resistance level. Currently the price is above both the 20 day moving average and 50 day moving average. 0.7152 (yesterday's low) is a major support. To sum up, above 0.7150 look for new upside targets at 0.7265(around today's high) and 0.7310.
GBP/USD is expected to trade with a bullish bias. After the Bank of England’s decision to keep the interest rate stable, the pair touched a daily high at 1.4218 (today's high) and dropped down rapidly, but the downward movement is expected to be limited. The relative strength index is above its neutrality area of 50. The intraday outlook remain bullish and the pair is expected to drift towards the first upside target at 1.4218 (today's high) and 1.4277 (last month's high).