EUR/USD and GBP/USD surge while USD/JPY falls as dollar weakens after Fed meeting
The Fed’s shift last night has seen a rapid response from FX markets, as the dollar weakens in expectation of cuts to interest rates.
EUR/USD stages turnaround in wake of FOMC
It is tough trading EUR/USD. First a dovish European Central Bank (ECB) sends the pair downwards, and then a dovish Federal Reserve (Fed) comes along and sends it heading skywards.
It is possible that the bounce this week from $1.12 creates a higher low for the pair, perhaps bottoming out after declines since the end of September. A rally above the early June high of $1.135 would be needed to provide a more bullish view in the longer term. Having rallied by 100 points in the past two days, a pullback may occur, and it will be vital to watch this to see if buyers appear to create an intraday higher low.
GBP/USD soars after dovish Fed
GBP/USD has surged thanks to the weakening US dollar and is now poised to challenge the $1.275 area that marked the peak in late May and early June. A near-straight line move since Monday may well result in a short-term pullback, but this may see further buyers emerge.
No one currently expects the Bank of England (BoE) to follow the dovish path of the ECB and the Fed, but there is not much the UK central bank can say that will convince anyone. The most credulous that its next move will be a rate hike.
USD/JPY breaches May low
A dovish Fed has resulted in a push lower for the USD/JPY pair, and is currently moving below the low of late May around ¥107.80.
Further declines target ¥106.80 in the short term. As with EUR/USD and GBP/USD, the move since Monday has been rapid and relentless, so a short-term rebound is possible, but this would likely set up a fresh selling opportunity if the recovery fails to move back above ¥108.50.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
