FX Midweek Outlook 23 March 2023

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Upcoming Events

Today: Interest rates decisions from SNB (CHF) and BOE (GBP)

Tomorrow: US and European PMIs


FOMC Recap

Fed raised rates by 25 bps as expected to a target range of 4.75-5.00%. However, Chair Powell removed a reference to “ongoing increases” in its Fed Funds rate, replacing it with a vague comment that “some additional policy firming may be appropriate.” This means that the end of rate hikes is near, if not already at its end. Dollar took a dive following the dovish hike. Market participants are more concerned about how the Fed thinks and handles the recent banking situation.




FX: EURUSD

EURUSD M30

The US dollar fell against Euro when the Fed’s decision crossed the wire. In the following hour, we witnessed a near 120 pip rally in EURUSD before a minor retracement calmed the buyers down. Volumes are relatively low right now during Asia but the pair is still steadily rising. 

Will the dollar continue to weaken against its peers?

EURUSD Daily

On the daily timeframe, EURUSD is on a hot winning streak, and considering the strong bullish momentum that is building up, we think that testing the next resistance near 1.1025 may not be an issue in the short term.


FX: USDJPY

USDJPY Daily

USDJPY continued its plunge after hearing what the Fed said. Looking at the chart, it is evident that the key 131.000 support level has been breached by a significant margin and that there is a lot of free space for the pair to dive further until it meets the next support near the 128.300 area. 

On the fundamentals front, we believe that Yen as a safe haven currency has also benefited from the recent banking turmoil and the uncertainty that it has stirred up. A new governor from the BOJ might have also firmed up Yen’s confidence.



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