After FOMC, investors turn to the ECB

The U.S. dollar was seen trading weaker on Wednesday following the FOMC statement where the central bank hiked interest rates by 25 basis points as widely expected.

The FOMC also announced that it was looking to squeeze in an additional rate hike for the fourth time this year. While the markets were volatile, the greenback settled lower following a push to intraday highs.

The European Central Bank’s monetary policy meeting is scheduled to be held today. Focus turns to the ECB as policymakers’debate ending or tapering the QE program. As previously announced, the ECB is expected to end its 30 billion euro bond purchase program this September.

Besides the rate statement and the press conference, the ECB officials will also be releasing the economic forecasts as well.

On the economic front, the final inflation figures from France and Germany will be coming up today followed by retail sales data from the UK. In the U.S. trading session, retail sales report is forecast to show a slight improvement with headline retail sales expected to rise 0.4% while core retail sales is expected to rise 0.5% on the month.


EURUSD intra-day analysis


EURUSD (1.1802): The EURUSD currency pair was seen holding to the gains after once again testing the support level at 1.1730. Price action was moderately bullish with the daily session posting a bullish engulfing candlestick pattern. This indicates a possible move to the upside. On the 4-hour chart, price action continues to trade flat within 1.1824 - 1.1730 level ahead of the ECB's meeting. The downside target is seen at 1.1610 while a breakout above 1.1824 could signal a move toward 1.2232 level.


USDJPY intra-day analysis


USDJPY (110.23): The USDJPY currency pair was seen failing to make any further gains after price action was seen trading near the resistance level of 110.62. The doji and the reversal candlestick pattern on the 4-hour chart was followed by weaker price action. We expect the downside to prevail at the moment as USDJPY is likely to push lower on the day. The support level at 109.57 is the most likely downside target while any gains are likely to be limited to the 110.62 resistance.


XAUUSD intra-day analysis


XAUUSD (1298.96): Gold prices remained flat on the day despite the short term volatility and the weaker U.S. dollar. Price action remains stuck below the resistance level of 1304 - 1301 level and today's ECB meeting could likely be the catalyst for a breakout from this range. The downside target at 1282 remains intact, which could be tested in the event of a decline in gold prices. To the upside, gold prices are expected to test the 1325 level provided the resistance level is breached.

This market forecast is for general information only. It is not an investment advice or a solution to buy or sell securities.

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