FOMC rate decision causes US dollar selling to accelerate

Dollar slumps

The US dollar moved lower against a basket of currencies this week, following dovish commentary inside the Federal Open Market Committee monetary policy statement. The FOMC kept rates on-hold and saw no significant outlook in expectations towards rates through to the end of 2020. The market took the news as a bearish indication that economic stresses inside the US economy are going to keep interest rates at low levels next year. The US dollar suffered heavy losses against the Swiss franc, euro, Japanese yen, and commodity-related currencies.

• The USDJPY pair is only bullish while trading above the 109.00 level, key resistance is found at the 109.40 and 110.00 level.

• If the USDJPY pair continues to trade below the 109.00 level, sellers may test towards the 108.20 and 107.50 support levels. 

Sterling rally

The British pound soared to a fresh 2019 trading high against the US dollar currency this week, as Borish Johnson won the United Kindom General Election and remained British Prime Minister. The Conservative party secured the victory by a huge majority, easily beating nearest rivals, the Labour Party. The GBPUSD pair traded towards the 1.3500 resistance level after the election victory, marking the highest level for sterling since May 2018. Traders cheered Prime Minister Johnson’s election victory, as he is seen as being positive for the UK economy and Brexit.

• The GBPUSD pair remains bullish while trading above the 1.3060 level, further upside towards 1.3500 and 1.3600 levels seems possible.

• If the GBPUSD pair moves below the 1.3060 level, further selling towards the 1.2960 and 1.2940 support levels remain possible.

SNB hold

The Swiss National Bank kept interest rates unchanged this week and cautioned that it remained vigilante to excessive moves in the foreign exchange market. The SNB maintained its dovish stance towards interest rates and pledged to curb any rapid appreciation in the Swiss franc currency. The market reaction saw the USDCHF pair ticking marginally lower on the SNB policy decision. The Swiss franc has recently been appreciating against the US dollar, with the USDCHF pair testing towards the 0.9800 level.

• The AUDUSD pair is bullish while trading above the 0.6830 level, further upside towards the 0.6900 and 0.6960 levels seems possible.

• If the AUDUSD pair moves below the 0.6830 level, sellers may test towards the 0.6800 and 0.6740 support levels. 

Euro bullish

The euro currency performed a strong upside breakout against the US dollar this week, as the greenback came under heavy downside pressure. The EURUSD pair traded above its 200-day moving average for the first time this year, following the ECB policy decision. Technical signs had been emerging for weeks that traders had been growing more bullish towards the EURUSD pair. The ECB policy statement, delivered by President Largade, sounded slightly more hawkish than expected, giving markets and the EURUSD a boost. Weakness in the US dollar index provided helped the breakout, with the EURUSD pair firming towards the 1.1200 handles.

• The EURUSD pair is bullish while trading above the 1.1100 level, further upside towards the 1.1200 and 1.1300 levels seems possible.

• If the EURUSD pair moves below the 1.1100 level, sellers may test towards the 1.1060 and 1.1040 support levels.