US dollar slips as Fed concerned on inflation

John Benjamin Orbex

The US dollar posted strong losses yesterday as the currency fell to a fresh 13-month low. This was after a brief two-day period of gains. The declines came as the Federal Reserve held monetary policy steady and noted that the unwinding of the balance sheet would begin soon.

However, the statement mentioned that inflation was running below the Fed's 2% target rate. This weakened the sentiment in the greenback. Investors also scaled back the bets on another rate hike which has now fallen below 50%, according to the CME Group's Fed funds tool.

Looking ahead, the economic calendar today will include the core durable goods orders while Japan will be releasing the national and core CPI data.

EURUSD intraday analysis

EURUSD (1.1760): The EURUSD continued to reach to fresh three year highs as price action rose to 1.1776 earlier today. The continued gains in the EURUSD suggest further upside, especially after the previous highs above 1.1700, was breached. The main support still remains at 1.1635 which could be tested in the near term, while the overall main support level remains at 1.1475. The bullish momentum could see the EURUSD reach for 1.2000. This is a key level where an unfilled gap remains from over three years ago, making this the next main resistance level to the upside.

USDJPY intraday analysis

USDJPY (110.89): The USDJPY attempted to rally towards 111.77, but price action saw a quick reversal of gains at this level. USDJPY was seen falling back to the previous support at 110.80. A confirmed close at this support could still keep the bias inclined to the upside. However, if USDJPY slips below this support, expect the declines to push lower to test the next support at 109.58. On the 4-hour chart, USDJPY is currently in the process of forming a higher low in price. If we get to see a reversal here, USDJPY could likely remain range bound within 111.77 and 110.81 levels.

XAUUSD intraday analysis

XAUUSD (1263.94): Gold prices reversed the losses after falling to 1245.90. The failure to test the support at 1241.36 could, however, suggest that price action will eventually slip back to this level. Gold prices broke past the resistance level at 1252.70 to rise to a fresh one-month high at 1264.97. The breached resistance at 1252.70 will now act as support. Any dips to this level could potentially attract new buyers into the market.

Author

John Benjamin

Orbex

John is a market analyst for Orbex Ltd. and is a forex and equities trader having been involved in trading since late 2009. John makes use of a mix of technical and fundamental analysis and inter-market relationships.

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