The Federal Reserve raised interest rates as clearly telegraphed but did not alter any of its forecasts. Here are 5 reasons for the fall of the dollar. The initial drop was followed by some consolidation in the Asian session.
But now, at the wake of the European session, the greenback comes under fresh selling pressure. Will this turn into a big avalanche or can the USD recover and correct from here? The reaction is not fully even, with each currency taking advantage or falling behind depending on other circumstances.
Here are updates on 7 currency pairs:
- EUR/USD is trading around 1.0730, buoyed also by the favorable outcome of the Dutch elections. The extreme-right Freedom Party did not make significant gains. The next resistance line awaits at 1.0760 and 1.0830. Support is at 1.0660.
- GBP/USD is trading around 1.2270. It had a hard time to break above 1.23 but is above the previous resistance line of 1.2250. Sterling awaits the actual triggering of Article 50 as well as the BOE decision later today.
- USD/JPY is falling and trading around 113. Further support is at 112.50. The Bank of Japan also made its decision and seemed reluctant to add further stimulus. This helps the yen.
- USD/CAD is around 1.3380, which is a line of support. Further support is at 1.33 and resistance at 1.3460. The Canadian dollar suffered from the downfall of oil prices, but these have stabilized yesterday.
- AUD/USD is just above 0.77. The pair was one of the biggest beneficiaries of the initial Fed decision but later received a blow from the drop in Australian employment. Resistance is at 0.7740 and support at 0.7610.
- NZD/USD: Also the kiwi was at first a big winner but the weak GDP growth from New Zealand, 0.4% q/q, hurt the kiwi. The pair sits above 0.70. Support is at 0.6950 and resistance at 0.7040.
- USD/CHF: We usually don’t cover the franc but we have the quarterly SNB decision coming soon. Will they continue intervening in markets? Most probably. Dollar/franc is just under parity. Resistance is at 1.0090 and support at 0.99.