It has been another solid day for the US economy as the FED raised interest rates to 2% (1.75% prev) showcasing that things may be returning to normal for the world's largest economy. Powell was quick to champion the US economy in his questions with reports and make sure they understand that 2% was the key goal for inflation for the US economy. The FED was also quick to point out that it sees the future of the US economy and the recent fiscal policy having positive flows on the economy, something that markets were quick to take notice of. On top of this earlier on we had a strong PPI reading m/m of 0.5% (0.3% exp) adding further fuel to the fact that the US economy is expanding. So with rates lifted and economic data still looking better and better, it seems likely that markets will certainly be more open to risk and of course the USD may appreciate against some of the safe haven pairs quite well, like the JPY and CHF.
For me the USDJPY continues to be the focus. It has suffered a little today, as the markets didn't get to much further information than was already expected, so they were quick to sell on the back of this. It's looking a little downbeat but retail sales data is due out tomorrow and will be quite the bullish weapon if it beats expectations. Also the bullish trend line is still in play and markets may look to bounce off it again if the bears do get to push it lower. However, for now resistance levels can be found at 111.083 and 112.033, with the potential to go much higher if US data continues to be so strong. On the bearish side, support levels can be found at 109.347 and 108.721, but as I noted before the trend line will be the key dynamic support level if the USDJPY does approach it.
One of the other major pairs to watch is the AUDUSD at present, as it continues to find itself under pressure. At present though it has fought back and claimed some ground against other pairs and this includes the USD, but it's looking like it may be pinned by two opposing trend lines from the bulls and the bears. The bearish trend line coming down the chart is a strong gradient and has been tested numerous times, so there is a case for the market to respect it. The bullish one is much shorter and the market is likely to discount it, if there is pressure between the two trend lines. As sentiment seems to be bearish support levels can be found at 0.7527 and 0.7467 on the charts. While resistance levels can be found at 0.7661 and 0.7751 in the long run, and in the event of a bullish break out.
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