These FOMC meetings are becoming very predictable, Yellen dovish, dollar dumps. Next meeting we get all excited again
I'm not really surprised that I turn up to see USDJPY down around 100 pips from where I left it. We've seen the same thing over and over again
119.00 is still secure after a low of 119.06. Further support is down at 118.80 then 118.60
USDJPY daily chart
Further down, should the tears continue, we have the 38.2 fib of the Oct 2014 swing up at 117.95. That was blasted in the China tantrum but I expect it to feature again. There's old support just ahead of it at 118.00/10
GBPUSD has done a good job of wiping out the shorts from 1.5818 after knocking through the last fib of that fall. 1.5650/55 is one minor level we've stumbled against and there's a stronger looking resistance point around 1.5675/80
GBPUSD H4 chart
We should see some support around 1.5600/20 if we fall back but the stronger stuff will be down at the broken 1.5550/55 level
EURUSD
Here were are again at 1.1450, a strong level throughout the year. It took China to send us through it but it wasn't to last
EURUSD daily chart
The fibs from the Dec 2014 fall are plain to see and again, I would expect the 50.0 fib at 1.1519 to be recognised again if we go there.
So that's the levels but what do we do now?
I would think that it won't be long before we settle down into the old routine. The US session later will be a big clue as to whether we see further declines or if that's as far as dollar bulls are willing to take things. Things are slightly different to last time though. For one the pound is in a different place and feeling chipper still so may see some further upside even in the face of a dollar comeback
What's changed in Europe? Nothing. And that's going to make the upside tough still
Unless we see a really big blow out in (a fundamental one not a China strop), then the recent ranges should keep things in check. That's going to be the 118.00-122.00 area in USDJPY, 1.5300/30-1.5800/20 in GBPUSD and 1.0820-1.1450 in EURUSD. Obviously the biggest risk is to the EURUSD top here now.
I'll be looking for a similar trade for the October FOMC that I took for this one but we might find that the dollar is less enthusiastic to run up ahead of it, unless we see a big jump in positive data. Unfortunately there's a longer wait between the BOJ and Fed this time so I won't necessarily have the trigger that I had this time.
I would let the US session be the guide for direction today and if at the end, we're no worse off than we are now, that will possibly be the end of this episode and we'll get back to the day to day data driven, CB talk moves we've had previously
Until then be ready for more tears
USD bull: "I WANT MY RATE HIKE!!!"
