Market Beat:

The Federal Reserve left its benchmark rate unchanged as analysts expected yesterday, but all eyes were focused on the monetary report. The report was slightly less hawkish than expected and that drove the Euro higher in late trading. The other currencies also gained ground on the Dollar following the announcement, with the Pound, the Aussie and the Yen benefiting the most from the Dollar weakness.

Oil took another hit in early trading and continued lower after the surprise build in U.S. Inventories that was accompanied by the first production increase in three months. Precious metals were flat before the fed but jumped higher after the release, and pushed the commodity currencies slightly higher despite the weakness of oil.  The weakest currency of the day was the Canadian Dollar as it was influenced mostly by oil, and the bullish developments in the U.S. economy.

EUR/USD (current price: 1.1070 )

The most traded pair finished higher following the FED meeting as it rocketed higher in the last two hours of the day. German Import Prices missed the consensus estimate by a small margin with a reading of 0.5%, but the bullish British GDP print helped the common currency on Wednesday. The U.S. central bank is unlikely to raise interest rates in the coming months and that combined with the promising economic trends could lead to an extended neutral period for the cross.

Our assessment: EUR/USD is still slightly above the 1.10 support, but it’s stuck below the 1.1185 resistance, and inside a declining short-term trend channel as well.

EUR/JPY (current price: 116.05)

The Euro ahs gained ground yesterday on the number one safe haven currency, but the Yen continued its wild period today, as it jumped compared to its most important peers in early trading yet again. There were no major releases coming out before today’s monetary statement, but rampant stimulus-speculation kept pushing the currency around, with no clear direction following last week’s strong rally in the pair, that pushed it over the 118 level.

Our assessment: EUR/JPY is still in a strong declining long-term downtrend, but the last two week’s lift pushed the pair higher by more than 700 pips before topping out near 118.75.

GBP/USD (current price: 1.3185)

Cable also benefited from the negative surprise by the FED, as the Great British Pound was already lifted by the slightly better than expected British GDP release. The number came in at 0.6%. beating expectations by 0.1%, although the quarterly print only included one month of data since the all-important Brexit vote that changed the narrative regarding the British economy as well as the sentiment of businesses and consumers in the country.

Our assessment: The pair is still in a broad trading range that developed after the June referendum, with strong resistance at 1.3550 and key support at 1.30 limiting the movement in the volatile market.

WTI Crude Oil (current price: $42.27)     

Oil reacted to the bearish U.S. data in a negative way, as the one-month old correction still looks to be intact. The decline took $10, or 20%, of the price of WTI already, after the $24 rally between February and June. The crucial commodity finished the session significantly lower again, as the dovish wasn’t enough to lift the beaten down commodity. The negative fundamental developments might mean that the correction will continue in the coming weeks, probably below the $40 level.

Our assessment: Oil is now back to the flat 200-day MA as it has been trending down in the past one month from the highs above $52, it will be interesting to see how the commodity reacts to the all-important indicator.

Economic Releases

Forex markets are probably facing another volatile session as the much awaited Japanese monetary Statement could finally end the speculation regarding a new stimulus package in the country. The weekly U.S. Unemployment Claims count will be released during the afternoon, right after the announcement of the German CPI, and the Spanish and German Unemployment Rates. The Japanese Retail Sales number, the CPI and Household Spending will also be published before the monetary release.