Euro Stays Strong, but the Pound Drifts Down

The Markets around the world were in general cheer yesterday. The FX markets were cheerful as the much needed volatility returned to the markets. The stock markets were all cheerful and bullish as the US Fed did not hike their rates this month and there was no clear direction on when the hike would come. This led to a slow grind upwards for the EURUSD and the GBPUSD pairs.

The yen crosses also had a wild ride after the release of the BOJ policy decision but USDJPY found good support at 100 and has since bounced back strongly above 101. The pound and the euro had a period of bullishness but all these seem to have evaporated 24 hours after the FOMC decision as overnight, we saw these pairs pare their gains and we see the euro sitting at the strong support at 1.1200 after having visited the resistance at 1.1250. The pound continued to be volatile as it made a strong push through 1.31 but then lost steam soon afterwards and drifted down. It has now broken through the support at 1.3060 and now sits at 1.3040 and we believe that it could soon drift down back to 1.3000 if the USD strength continues.

It has been a generally quiet start to the last day of the week with the only news of the morning being the Manufacturing PMI from Japan which came in at 50.3 showing that the manufacturing sector was expanding. In the evening, we have PMI and retail sales from Canada and that is the only news of note today. We expect the ranging to continue during the course of the day and as long as you trade the ranges, you should be fine.

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