US Dollar Advances on Hawkish Fed Meeting

Key Economic Data - Coming Up Today (All Times GMT+3) 

EURUSD Hourly Chart

The EURUSD has declined to a low of 1.2834 following the FOMC Press Conference. Fed Chair Janet Yellen kept the pledge to hold rates down for a 'considerable' time frame. As part of the FOMC Projections the target interest rate was increased to 1.375% for the end of 2015 versus June's projection of 1.125%. This implies a further rate rise of 0.25% during the course of 2015 than previously foreseen by the Federal Reserve. The US Dollar strengthened against the EUR, JPY, AUD and Gold declined to a new low of $1215. The EURUSD is now at 1.2870 after reaching as high as 1.2890 this morning session. The FOMC events were enough to break the EURUSD from the 1.2900- 1.3000 range the pair had been caught for a week of trading days. The Fed's move to end stimulus and bond purchases in October and the increase in the target interest rate imply a shift in US economic policy and will most likely underpin a stronger dollar. At present the Euro is under pressure with the pair below 1.30 and still trading below the downtrend channel. As long as the pair remains below 1.30 and below the downtrend channel, the bias remains bearish.

EURUSD Support areas include , 1.2867, 1.2800, 1.2745 followed by a key support at 1.2550. Resistance levels above are at 1.2959, 1.30 figure level, followed by 1.3165.

GBPUSD Hourly Chart

The GBPUSD  is now poised at 1.6300 and has resisted the dollar strength seen across other pairs. The reason the pound has held up, is the growing view that the Scotland Referendum will result in a No vote, albeit it by a small margin. Today should be a lively day in the pound as we get closer to the vote results. Volatility is expected. Yesterday the GBPUSD rose 200 pips from 1.6160 to 1.6360 and has since pulled back to trade around the 1.6300 figure level. The RSI has dropped from just above 70 and this may indicate scope for a downward correction in the price. All eyes on further news about Scotland and of course the results which should be out by the evening. GBPUSD support areas include  1.6250, 1.6150, 1.6100, 1.6000, 1.5900, and 1.5850. Resistance levels and upside targets at 1.6365 and 1.6500. 

USDJPY Hourly Chart

SDJPY soared to a new 6 year high of 108.87 after smashing through the 107.39 barrier level. Once the pair got through this 107.39 level there were few sellers and the price spike up towards 109.00. The pair is up 9% in two months. The FOMC announcements yesterday evening set the pair spiralling higher. Japan has been in a low interest rate environment since 1980 and a move up in US yields will support the dollar versus the yen. Bank of Japan Governor Kuroda indicated that Japan will keep easing monetary policy until inflation reaches 2%, which is still a considerable way off. As you can see this creates a total contrast between the US and Japan. The US is taking its foot off the 'easing' pedal and Japan still has their foot floored to the accelerator. The logical consequence is a dollar strength against the Yen. This is a medium term expectation, its important to remember we have already witnessed a period of near-term USDJPY strength this month and last.

Support levels for USDJPY can be seen at 108.00, 107.00, 106.65 , 106.00 and 104.65. Resistance to the upside at 108.00, 109.00 and ofcourse big level at 110.The USDJPY is trading at a 6 year high, levels not seen since 2008.