The dollar is holding slightly higher today but from a technical perspective, not much has changed in the aftermath of the Fed policy decision yesterday. I talked about the dollar vulnerabilities against the euro and pound yesterday here and we are very much trading back at similar levels at the moment.
In between, we saw the dollar recover some poise right after the FOMC meeting only to give it all back at the end of the day. As we look to the session ahead, the ECB and BOE will be key risk events to vindicate the potential technical breaks in both EUR/USD and GBP/USD. Here's a quick glance at the charts.
EUR/USD is down 0.3% to 1.0650 levels now but the major development this week has been that break above the key trendline resistance (white line) near 1.0600. Add that to a push above the 38.2 Fib retracement level of the downswing from January last year at 1.0610, and buyers have scope to extend the upside move towards 1.0800 next potentially.
GBP/USD is down 0.2% to 1.2395 today but has made some good headway in breaking above the August highs of 1.2276-93 and also the 50.0 Fib retracement level of the downswing from last year, seen at roughly 1.2306 (this may differ depending on the September low price). As such, buyers are in a decent spot in chasing a further upside push towards 1.2500 next.
For now, the technicals are still working in favour of the euro and pound but all of this still needs to line up with broader market sentiment (equities are still an outside risk factor) as well as the ECB and BOE takeaways from later today.
