USD Slides Despite Hawkish Fed, BoE Takes the Central Bank Torch

FED SEES 7 HIKES THIS YEAR, WILL THE BOE SOUND EQUALLY HAWKISH?

The US dollar traded lower against all but two of the other major currencies on Wednesday and during the Asian session Thursday. It gained only against JPY, while it was found virtually unchanged versus CHF. The main gainers were AUD, NZD, and GBP in that order.

DJIA — TECHNICAL OUTLOOK

The Dow Jones Industrial Average cash index traded higher yesterday, after it hit support at 33400. However, the advance stayed limited near the key resistance obstacle of 34120, which has been preventing further advances since February 22nd. Since then, the index has been trading in a range pattern, between that barrier and the 32290, and thus, as long as it stays between those boundaries, we will maintain a neutral stance.

EUR/GBP — TECHNICAL OUTLOOK

EUR/GBP traded lower yesterday, after hitting resistance at 0.8430. Although the prevailing short-term path was to the upside, the latest slide, combined with the negative divergence between the price action and both our short-term oscillators, suggests that the prior advance has run out of steam. Today, the rate fell below Tuesday’s low of 0.8305, and a dip below 0.8360, the low of March 11th, may be the reversal confirmation.

AS FOR THE REST OF TODAY’S EVENTS

During the Asian session today, we already got Australia’s employment report for February, which came in better than expected, allowing Aussie traders to maintain bets over several rate hikes by the RBA this year.

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