The U.S. dollar has been torn between hawkish and less hawkish Fed speak. Given the greenback's strong dependence on the prospect for tighter monetary policy it first strengthened against the euro and British pound on comments from Fed President Patrick Harker who said a rate hike next month is not "off the table at this point".
Most analysts expect the Fed staying on hold at the next FOMC meeting on March 14-15. A March rate hike would therefore come as a big surprise. Later during the day, the dollar fell against most major currencies as Fed President Loretta Mester took the wind out of the sails of the dollar bulls when she said policy makers don't want to surprise the market on interest rates.
While investors expect at least two rate hikes this year, the FOMC meeting minutes scheduled for release today at 19:00 UTC may shed some light on the prospect of tightening monetary policy. Let us be surprised, while focusing on the technical picture.
EUR/USD
The euro is trending downwards and based on that downtrend we like selling euros at higher price levels. Bearing in mind that the currency pair is slightly oversold in short-term time frames, we also prepare for potential pullbacks, which may send the euro towards 1.0620 and 1.0660. On the downside, we will focus on a break of 1.0520 which could lead to further losses towards 1.0490 and 1.0450.
Euro traders should keep an eye on the Consumer Price report, scheduled for release at 10:00 UTC. Any disappointment could increase the pressure on the euro.
GBP/USD
The cable rejects any attempt to break out of its current sideways trading range and fluctuates comfortably between 1.2525 and 1.2380. However, we are in the starting blocks and prepared for potential breakouts.
Revisions to Q4 GDP numbers are due for release at 9:30 UTC but if the headline figure is in line with expectations the report should be of less importance.
Here are our daily signal alerts:
EUR/USD
Long at 1.0565 SL 25 TP 20, 40
Short at 1.0515 SL 25 TP 20, 70
GBP/USD
Long at 1.2510 SL 25 TP 25, 40
Short at 1.2440 SL 25 TP 25, 40
We wish you good trades and many pips!
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