Volatility Warning: Fed Rate Statement, British Preliminary GDP
Forex News: The US Dollar failed to stage a comeback and yesterday’s trading session was controlled mostly by the Euro bulls. In the afternoon we saw rejection around 1.1713, partly due to better than expected numbers for the U.S. Consumer Confidence survey.Technical Outlook
After coming within 1 pip of August 2015’s high at 1.1713, the pair started to show rejection and retraced close to the previous high at 1.1685. The Relative Strength Index is close to overbought and is showing bearish divergence (price is making higher highs and the oscillator is making lower highs); on top of that, the last candle shows a long wick, so all these signs point towards a move south. However, it must be noted that an uptrend is still in place and a break of 1.1713 cannot be overruled.Fundamental Outlook
The FOMC will announce the interest rate (no change expected; currently <1.25%) today at 6:00 pm GMT and will release the Rate Statement, which contains the reasons that determined the rate decision. Usually the rate is priced into the market so it tends to have a muted impact, but the Statement can create strong movement if it contains any hints about future monetary policy.
The Pound remained above the 50 period Exponential Moving Average and pushed above resistance mostly due to US Dollar weakness early during yesterday. A small recovery was seen later in the afternoon, on the back of positive U.S. data.Technical Outlook
The pair is trading above the 50 EMA and above 1.3030, which was previously resistance, so the outlook is bullish but as long as price stays between 1.3000 and 1.3100, it can be considered in a range and without clear movement. Today’s direction will be mostly influenced by the fundamental side, as both currencies in the pair will be affected by key releases.Fundamental Outlook
At 8:30 am GMT we have a very important UK indicator: the Preliminary Gross Domestic Product. This is the main gauge of overall economic performance and the Preliminary is the first in the series of three versions, thus it tends to be the most important. Today’s forecast is a change of 0.3%, while the previous was 0.2%; higher numbers usually strengthen the Pound.