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Dollar Recovers After Initial Sell-Off

Daily Forex Market Preview, 15/06/2017

The US dollar pared losses on Wednesday after initially falling sharply after the FOMC meeting. The Federal Reserve hiked interest rates on Wednesday and maintained its hawkish view on the economy. The US dollar index fell to a fresh 7-month low before pulling back higher towards the close.

Looking ahead the busy economic calendar continues with the SNB and the Bank of England monetary policy meetings lined up for today. The focus will, of course, turn to the Bank of England which will need to take a tough call given the recent decline in wages amid rising inflation. No changes to monetary policy are expected at today's meeting, but the BoE officials are likely to flag the downside risks, which increases the scope of possible policy easing.

The Swiss national bank is however expected to remain on the sidelines with no major changes expected. The SNB's 3-month LIBOR rate is expected to remain steady at -0.75%.

EURUSD intraday analysis

EURUSD (1.1222): The EURUSD rallied to a fresh 7-month high, rising to just below $1.1300 during the FOMC statement. The common currency, however, pulled back lower to close at 1.1218. Price action continues to trade within the rising wedge pattern forming on the daily chart. This suggests a possible downside break in the EURUSD. Watch for support at 1.1200. On the 4-hour chart, the resistance level at 1.1200 - 1.1245 was tested with price failing to hold on to the gains. This could potentially put further downside in EURUSD towards 1.1100 with the possibility of testing 1.1000.

GBPUSD intraday analysis

GBPUSD (1.2747): The British pound tested the neckline resistance level of 1.2800 yesterday. Price action closed with a doji at this level and a bearish close today could signal a decline to 1.2600 which is the measured target for the head and shoulders pattern on the daily chart. On the 4-hour chart, we can see that GBPUSD formed a temporary bottom above 1.2600. With the BoE meeting today, the GBPUSD could possibly push lower. This bias changes only on a daily close above 1.2800 and above yesterday's high of 1.2817.

USDJPY intraday analysis

USDJPY (109.18): USDJPY fell to test the support level at 109.50 - 109.25. However, price action was maintained at this level and marks a second test of the support level. In the near term, a bullish continuation is required from this level in order for USDJPY to test 110.79. There is also the potential for USDJPY to break out above this resistance level and test the next main technical level at 112.00.