Dollar Surges Post Fed Decision, Eyes Gain

Dollar Surges Post Fed Decision, Eyes Gain

By: Simon Furman | Where To Trade | On:18-09-2014 09:07
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Dollar Surges Post Fed Decision, Eyes Gain

Key Highlights

  • US dollar surged higher yesterday after the fed interest rate announcement in which the central bank continued with their taper plan and reduced asset purchasing program from $15B to $10B.
  • Fed mentioned that the central bank is in no hurry for a rate hike, and rates will be low for a considerable time.
  • EURUSD blasted lower towards the 1.2900 after the release after another failed attempt to break the 1.2980 level.

USDCHF

As mentioned the US dollar climbed higher against most of its counterparts including the Swiss franc after the fed interest rates and policy announcement. There was a bearish trend line on the hourly chart of the USDCHF pair, which was broken just before the release. The most important thing was that both 100 and 200 simple moving averages were coinciding with the mentioned trend line. So, that particular break turned out be a significant one. The pair later retested the same trend line and found buyers around the 100 hourly moving average. The USDCHF pair is now trading more than 100 pips higher from the yesterday’s low, and tested the 0.9430 area during the Asian session. Currently, the USDCHF pair is trading around the 23.6% fib retracement level of the last leg from the 0.9320 low to 0.9430 high. It is very likely that the pair might find buyers around the mentioned fib level, but a break below could take it towards the 38.2% fib level.

Intraday Support Level – 0.9380

Intraday Resistance Level – 0.9430

  • Overall, the bias remains bullish as long as the pair is trading above the 0.9350-40 support area.
  • A short-term correction from the current levels cannot be denied, but it should be limited.

If the pair gain bids around the 0.9400-0.9380 again and trades higher, then a test of the today’s high is possible. A break above the same might take the pair towards the 0.9450 resistance area where the US dollar sellers could appear.  

AUDUSD

The Aussie dollar also failed to survive, as it broke a critical trend line and support area around the 0.9000 level. The AUDUSD pair traded as low as 0.8937, and currently trying to recover some of the lost ground. The mentioned broken support area might turn into a resistance in the near term. So, if the pair manages to climb from the current levels, then it might find resistance around the 38.2% Fibonacci retracement level of the last drop from the 0.9110 high to 0.8937 low. Any further upside in that situation is very less likely.

Intraday Support Level – 0.8937

Intraday Resistance Level – 0.9000

  • Overall, the bias remains bearish in the short and every rally might be seen as a selling opportunity.
  • A break below the intraday support level might encourage the Aussie dollar sellers moving ahead.

On the downside, the 0.8900 is a major support for the AUDUSD pair, and it would be very interesting to see how the pair reacts if it reaches there. There is a chance that the pair might consolidate for some time, as the recent move looks like overextended.

Simon Furman

Simon Furman

Think Global - Act Local

Simon Furman is one of the best financial analyst with 27 years of trading experience

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