Traders are preparing for some big moves in foreign exchange later today, with the Federal Reserve Bank due to update the market on its latest rate call. The FOMC is fully expected to keep rates on hold, and any move today would result in huge moves in the dollar. However, the more likely scenario is that we see some strong moves on the back of the forward guidance that we get from the statement or from Jerome Powell in his press conference later in the day, with any more dovish indications likely to see further pressure on the dollar and any relatively hawkish (or really less dovish) calls likely to see the dollar rally back into recent ranges.
Cable traders will be watching the event even more closely than some, with the pair sitting near a key technical level that could see bigger moves if we see breaks. Cable topped out a few times just under 1.3450 at the end of April, and even though it is trading nearly a big figure below that level now, a dovish Fed—or certainly a surprise cut—could see that level challenged swiftly, with a break likely to bring the key 1.4000 psychological level into focus. A less dovish FOMC would see the dollar push higher and Cable drop back into recent ranges, with initial support likely around 1.3230, where it has based in the last couple of weeks.
Resistance 2: 1.4000 – Psychological Level
Resistance 1: 1.3444 – Trendline Resistance and 2025 High
Support 1: 1.3230 – 23 April Low
Support 2: 1.2851 – 200-Day Moving Average
