The FOMC concluded its 2-day meeting today. It’s assessment of the economy to show concern of slowdown, but it did not introduce QE III. Instead it continues to be “accommodative” projecting the 0-25% benchmark interest rate level to stay throughout 2014.
“The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities.”
Source: FOMC Press Release 8/1/2012
EUR/USD 1H Chart 8/1/2012 2:45PM EDT
The EUR/USD held below the 1.2330 resistance mentioned in the previous updates. As noted, this bearish outlook has some near-term targets at 1.22, and more aggressively to 1.2175 (61.8% retracement). We have to be aware of the next key risk-event for EUR/USD in the ECB meeting tomorrow (8/2).
After the head and shoulder completed earlier in the week as noted in our previous update, the GBP/USD continued its slide and accelerated after the FOMC announcement. The 1H chart shows the market testing some of last week’s resistance pivots at 1.5550. Connecting the lows in July, we also have a trendline that might meet falling price action around 1.55. A break below that exposes the 1.5460 support pivot.
The AUD/USD was trading up so far this week, even making a new high during the 8/1 Asian-European session. However as noted in the previous update, it started to slow down ahead of US trading, and the FOMC announcement, evidenced by the bearish divergence in the 1H chart.
After the announcement, the pair fell to the noted key pivot at 1.0450. It still has to break that to truly show topping. The price action does suggest the intent of the market to push through, but even if it does, just remember that we still have a few more risk-events on Thursday AND Friday. The 1.0380 level was noted as a near-term support if the 1.0450 is broken.
USD/CAD popped up from 1.0020 to 1.0055 in an instant before cooling off. This 1.0050-1.0060 level was an important resistance pivot in from February through April in 2012.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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