The Fed is widely expected to keep rates unchanged at 5.25% and many analysts believe the central bank will emphasize in its post-meeting statement that worries about inflation pressures outweigh the economy’s housing slowdown.
The Euro fell broadly yesterday as investors took profits on the single currency’s gains before a European Central Bank policy meeting tomorrow.
The ECB is widely expected to suggest that a rate increase to 3.75% from the current 3.5% is coming in June, while the Bank of England is seen as almost certain to lift rates to 5.5% from 5.25%.
US Treasuries were steady yesterday with traders cautious of taking a position ahead of the Federal Reserve’s policy meeting later today.
Benchmark 10-year notes traded 1/32 lower in price for a yield of 4.64% from 4.63% late on Monday.
Any move by the central bank to back away from a tightening bias in its policy statement would likely boost bond prices, especially impacting short-dated debt.
Technicals:
EURUSD
The support at 1.3514 and resistance at 1.3575 seem hard to break. In case of a break of 1.3514 prices will move towards 1.3479.
GBPUSD
If 1.9880/65 stays intact, the next level to look out for would be 1.9924 and then 1.9950. A break of 1.9865 will lead to 1.9840.
USDJPY
Bearish with next support at 119.53 and 119.08. Resistance at 120.18 and 120.45.
EURJPY
162.60 seems to be a barrier. Next support at 161.85, 161.65 and 161.24.
AUDUSD
Bullish with next resistance at 0.8330/38. Support at 0.8261.
FX Overview
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