EUR/USD
The European session started calmly – with a slight decline towards 1.0510, but after the opening of the U.S. stock exchange at 13:30 GMT, the EUR bulls took control. Any speculative movements prior to the release of the U.S. interest rates were rather weak, but after they were raised by 0.50% to 1.00%, the reaction was immediate and the breach of the previous resistance at 1.0565 was convincing. The statement of Jerome Powell helped calm the dollar even more and the session ended at a high of 1.0630. The macroeconomic calendar shows that the week is expected to continue treading highly volatile waters, and that the NFP data for the U.S. on Friday at 12:30 GMT is likely to further reinforce this volatility. If the expected 3.5% unemployment and the 390,000 new jobs become a fact, then we could see the growth of the single European currency continue towards at least 1.0705, but if the data is even better than expected, then a jump in the dollar and the continuation of the downward trend could be the more likely scenario.
USD/JPY
The liquidity was quite scarce throughout the day as Japan celebrated a second public holiday and the banks were closed. The pair was hovering around 130.25, and soon after the U.S. main interest rate increase was announced at 18:00 GMT, the dollar reacted negatively and the USD/JPY entered a strong corrective movement. The yen managed to gain 70 pips on the wings of rising volatility and the decline stopped at around 128.65. The session continued with a slight rebound for the dollar, ending at the previous key level of 129.30. Whether the dollar will recover and move towards new highs above 130.25 or correct further in search of a better price at around 127.45 will depend on traders’ reaction to the U.S. NFP data on Friday at 12:30 GMT. Today’s session will most likely remain limited between the levels of 128.65 and 129.30.
GBP/USD
The Cable’s session was hesitant as it initially managed to accumulate 30 pips, but quickly handed them over before the Fed’s decision on the key interest rate was released at 18:00 GMT. However, the bulls seized their chance to attack following the negative reaction of the dollar and breached the previous resistance at 1.2595 in a movement, similar to that of the EUR/USD. The rally continued and managed to reach levels of 1.2630, around which the session had ended. Rising inflation in the UK is expected to push the BoE to boost the interest rate by 0.25% to 1.00% today at 11:00 GMT. What the market’s reaction will be, however, is yet to be seen. The probability of an upward movement in the Cable is higher due to the weakened dollar, but the possibility of the dollar rising after Friday’s U.S. NFP data report should not be underestimated, with the first support being the level at 1.2595.
EUGERMANY40
The up-trend movements in the German index had started at the beginning of the week, with short breaks and light corrections in between. Speculation was scarce before the Fed’s interest rate decision. However, the follow-up reaction as the new percentage was announced at 18:00 GMT was not late, and together with the other indices, the EUGERMANY40 managed to breach the resistance of 14045 and rise by 250 points. The bulls stopped their attack at 14270 and the session ended with a minimal correction of 50 points. The index is more likely to continue in the same direction and look for new peaks above 14430, but the expected NFP data on Friday at 12:30 GMTcould lead to a correction and a decline below the level of 13875 due to the currently high correlation with the U.S. indices.
US30
The most expensive index in the U.S. suffered a slight decline as Wall Street opened at 13:30 GMT and continued with a slight speculative trading session in anticipation of the data from the Fed. The downward movement found a bottom at 33035, and soon after the rise of the key interest rate with 0.50% at 18:00 GMT, the resistance at 33350 was breached and we saw an upward momentum in stocks, which led to the index posting its best day in the U.S. equities’ history following a Fed’s interest rate decision since 2008. The bulls had full control, and after realising that an increase of 0.75% had not even been discussed by the committee, the blue-chip index reached a peak of 34105. This resistance is key and whether it will be breached will be seen in the coming days. On Friday, the NFP data is expected to set the tone for next week’s movements.
