There has been very little movement so far today in the European session as traders appear to be waiting for the release of the FOMC meeting minutes. The 30 pip trading ranges for both EUR/USD and GBP/USD show the consolidation, while the equity markets have also been drifting since the opening exchanges this morning.
The FOMC meeting minutes tonight are the major focal point for traders who seem unwilling to pick a direction due to the uncertainty of what they may be faced with. Specifically, the market will be looking for potential confirmation of whether the committee backs Janet Yellen’s “around 6 months” clarification for when she was asked what a considerable time meant with regards to tightening rates. This would conceivably be dollar negative, though some of this may already be priced in by yesterday’s considerably dollar weakness.
EUR/USD is close to an upside break above $1.3811 which would complete a falling wedge pattern on the hourly chart and would suggest upside pressure on an implied target at $1.3860. There is resistance at $1.3819 but the price has not yet seen any profit-taking today yet and the pressure is building up now.
GBP/USD is also just consolidating and is yet to see a retracement of yesterday’s move, which supports the bullish case for gains. Intraday hourly momentum indicators are unwinding without the sellers targeting Cable which is a positive move.
USD/JPY remains the interesting forex pair with the support overnight coming almost bang on the rising 144 day moving average, which is a longer term basis of support. With general appetite for risk improving in the market today, Dollar/Yen is higher. Much of the selling pressure that that US dollar saw yesterday was driven through Dollar/Yen, with volume on the pair at a three week high, but this seems to be more settled today. I believe that with the longer term positive trends in place, this could be a longer term chance to buy Dollar/Yen between 101.50/102 as I see further gains throughout the year, back above the January high at 105.41.
Gold remains a recovery play, but the outlook is now being tested. The rising 55 hour moving average is the basis of support at $1304.80, while the support of a one week uptrend channel comes in at $1303.90. The key support comes in at $1294.60. An improvement in risk appetite could though see gold coming under downside pressure.
The DAX is quite considerably underperforming the FTSE 100 Index this morning, as a recovery has failed to so far significantly materialise. It is a rare thing indeed when the DAX underperforms UK equities on a positive day for the markets and could be something that needs to be kept an eye on. Support around 9400 is key now for the German index.