U.S DOLLAR RETREATS DESPITE FEDERAL RESERVE INTEREST RATE HIKE
FED LESS HAWKISH
The U.S dollar index moved lower across the board this week, as new Federal Reserve Chair Jerome Powell struck a less hawkish tone towards the American economy than investors had expected. Despite the Federal Reserve's decision to raise U.S rates 0.25 basis points, the greenback moved broadly lower as Jerome Powell voiced concern about below-trend U.S inflation. The Federal Reserve's median rate forecast for 2018 also fell short of the market's expectations, with only two more interest rate hikes seen this year by FED policy makers.
The U.S dollar index remains bearish whilst trading below the 90.00 level, further losses towards 89.00 and 88.35 seems possible.
A move above the 90.00 level on the U.S dollar index, may support further technical buying towards the 90.35 and 91.00 levels.
The British pound moved to a nine-week trading high against the greenback, as better than expected UK wage data and a drop in the UK unemployment rate helped sterling sentiment. The GBPUSD pair also received a boost and it was revealed that BoE member members McCafferty and Saunders dissented during the Bank of England rate decision, voting for an immediate rate increase of 0.25 basis points. The GBPUSD reached a weekly-high of 1.4220, before pulling back to the 1.4100 handle, as US trade tariff concerns weighed on overall risk sentiment.
The GBPUSD pair remains bullish whilst trading above the 1.3960 level, further gains towards 1.4220 and 1.4279 seem possible
A move below the 1.3960 level will shift likely GBPUSD sentiment, leading to a sell-off towards the 1.3890 and 1.3760 support levels.
The New Zealand experienced a volatile trading week against the greenback, with the NZDUSD pair dropping to its lowest trading level since early January 10th, before recovering broadly on U.S dollar weakness. The NZDUSD pair fell towards the 0.7152 support level in early week trading, as commodity related currencies came under heavy selling pressure. The kiwi later recovered upside momentum well above the 0.7200 handle, as commodity related currencies reversed direction after the Federal Reserve policy meeting. The Reserve Bank of New Zealand decided to keep rates unchanged at 1.75 percent, for the sixteenth straight month, noting monetary policy will remain accommodative for a "considerable period".
The NZDUSD pair remains bullish whilst trading above the 0.7220 level, further upside towards 0.7280 and 0.7350 remains possible.
A strong move below the 0.7220 level should lead to further NZDUSD selling towards the 0.7190 and 0.7150 levels.
CANADIAN DOLLAR REBOUNDS
The Canadian dollar gained ground against the U.S dollar this week, after the Trump administration reportedly compromised on one of the key issues in North American Free Trade Agreement negotiations. The U.S dollar had made strong gains against the Canadian dollar in early week trading, with the USDCAD pair moving to its highest trading level since June 28th, 2017, on overall weakness in commodities. The USDCAD fell below the key 1.2900 level, on the reports the Trump administration dropped a demand, that all Canadian car exports bounds for the U.S must contain fifty percent U.S content.
The USDCAD pair is bearish whilst trading below the 1.2919 level, further losses towards 1.2840 and 1.2770 remain possible.
Should price-action move above the 1.2919 level, buyers may test towards the 1.2990 and 1.3050 resistance levels.