The pair had a mixed day, mostly on the back of a lower US CPI and a worse than estimated value of the German ZEW Economic Sentiment which posted a disappointing 46.6. Tensions regarding Crimea were somewhat eased by Vladimir Putin’s affirmation that he is not looking to assimilate other regions.
Although the pair finished slightly lower, neither bulls nor bears made clear attempts to put an end to the pair’s indecision. The resistance at 1.3966 wasn’t threatened, support is still a safe distance away and the Stochastic doesn’t signal an extreme condition of the market. This state of relative apathy is likely to remain unchanged until the release of the cluster of US events scheduled late in the day.
At 6:00 pm GMT the Fed will announce if any change is made to the current 0.25% Federal Funds Rate and if the monetary stimulus is further trimmed by another 10 billion dollars; at the same time the FOMC Economic Projections (containing an economic and inflation outlook for the next two years) and the FOMC Statement (which contains the a breakdown of the members’ votes and reasons that stood behind those votes) come out, possibly creating the volatility the pair lacks lately.
Half an hour later, at 6:30 pm GMT Fed Chairman Janet Yellen will hold a Press Conference during which she will discuss in detail the reasons which were taken into consideration when the Rate decision was made and will also offer details about the monetary stimulus program. In the second part of the Conference she will answer audience questions and this is usually the part which creates the strongest movement.
US Inflation data didn’t really change the fact that US Dollar was preparing for a long time to move below major support and the expected break occurred yesterday, resulting in a clearly bearish day.
The pair moved about 55 pips lower after 1.6600 support was broken so we can consider the break to be a real one and we anticipate price to continue south. It is very possible to see a bullish move today which will re-test the recently broken level and will show us if it has turned into resistance or not. A clear return of price above 1.6600 will indicate that the ranging period is still not over. Keep in mind that today’s fundamental events will have a crucial impact on the pair’s movement.
Bank of England will release the Minutes of their latest meeting today at 9:30 am GMT. The Minutes will contain details on the Monetary Policy Committee members’ votes regarding the latest interest rate decision and in-depth look at the reasons which influenced their votes. At the same time, UK’s Claimant Count Change is released, showing the fluctuations in the number of unemployed people during the previous month. Analysts anticipate a change from the previous -27.6K to -23.3K and usually lower than estimated values are beneficial for the Pound. Without a doubt the US events will be of great importance for the pair’s movement.