THE FEDERAL RESERVE LEAVE RATES UNCHANGED BUT UPGRADE INFLATION EXPECTATIONS
FED TALK UP INFLATION
In Janet Yellen's last meeting as the Chair of the U.S. Federal Reserve, FED policymakers decided to kept interest rates unchanged but said inflation would likely rise this year. The U.S dollar and global equity markets showed only a muted reaction to the Federal Reserve's bullish rhetoric on domestic inflation. Investors are now pricing in three to four U.S rate hikes this year, as incoming central bank chief Jerome Powell continues to normalize FED policy.
The Cryptocurrency Bitcoin suffered heavy losses as the month of February got underway, falling below the $9,000 level, as the overall digital currency market came under heavy selling pressure. Bitcoin fell close to twenty percent this week, as controversy over Tether hurt trading sentiment in the broader cryptocurrency market. Tether, which is a unique digital coin, bought and valued on a like-for-like basis against the U.S Dollar, is the most widely integrated digital-to-fiat currency around.
BTCUSD remains strongly bearish while trading below the $10,400 level, further losses towards $8,800 and $7,772 remain possible.
Should price-action on BTCUSD move above the $10,400 mark, buyers my test towards $11,200 and $12,450 resistance levels.
SWISS FRANC STRENGTH
The Swiss franc continued to drift lower against the U.S dollar this week, with the USDCHF pair falling to levels not seen since August 2015. The rapidly depreciating U.S dollar and impressive economic data from Switzerland's economy helped push the USDCHF below the key 0.9300 handle. The Swiss National Bank has expressed concern about the rising value of the Swiss franc against the U.S dollar, with analyst speculating the SNB may soon directly intervene to weaken its currency.
The USDCHF pair remains strongly bearish while trading below the 0.9420 level, further losses towards 0.9180 and 0.9040 seem possible.
Should price-action move above the 0.9420 level, a rally towards the 0.9480 and 0.9540 levels would appear likely.
EURO HOLDS GAINS
The euro remained well-bid against the U.S dollar this week, as a mix of impressive eurozone data and continued weakness in the greenback kept the single currency well supported. Economic data out from the eurozone pointed to robust health in the trading block, with Manufacturing PMI's in France, Germany and Italy all trading at multi-year highs. The EURUSD briefly traded towards the 1.2300 handle in early week trading, but soon moved back toward the 1.2500 level, as overall euro demand kept the uptrend in the pair remained well intact.
The EURUSD pair remains strongly bullish while trading above the 1.2385 level, further upside towards 1.2600 and 1.2680 seems likely.
Should price-action decline below the 1.2385 level, a deeper correction towards 1.2355 and 1.2280 seems likely for the euro.