USD plummets with no clear sighting for Fed’s rate hike

March 19, 2015

The FOMC board did delete “patience” from their March statement, but instead, the Fed emphasised that this did not mean interest rate will be raised by June. The statement opens the door for a rate hike during the year, but in the meantime, gives several reasons for “patience” – strong Dollar, weak exports, and struggling overseas growth.

This new word play disappointed the USD bulls and triggered massive stop orders at multiple levels. USD index once slumped by over 5% to 94.80. All major currencies rebounded against the Dollar. Metal and oil prices surged and US stocks were inspired.

We finally see a significant bounce on EURUSD after it tumbled by over 13% since this year. The pair rocketed up 400 pips over the next two hours after the statement reaching beyond the 1.10 level, two-week high. The RSI 14 in H4 chart rose to 70 for the first time since early February.

20150319EURUSDh4 | Vantage FX

The Aussie Dollar once reached 0.7850 after it upwardly broke the short term trendline. The 0.7560 level seems to be the bottom in the mid-term as a round of rally has started.

20150319AUDUSDh4 | Vantage FX

Gold prices were also inspired by the Dollar’s weakness. It rebounded from the low area of a recent bearish channel and is heading to the upper boundary of the channel.

20150319XAUUSDh4 | Vantage FX

Looking to the stock markets, the Shanghai Composite surged by another 2.13% to 3577, refreshing a 7 year high. The Nikkei Stock Average gained 0.55% as well. The Australian ASX 200 remained unchanged at 5842. In the European markets, the UK FTSE climbed by 1.57%, the German DAX retreated by 0.54% and the French CAC Index gained 0.1%. The US stock indices rose across the board on Fed’s dovish statement. The S&P 500 closed 1.21% higher at 2099. The Dow gained 1.27% to 18076, and the Nasdaq Composite Index climbed by 0.92% to 4983.

On the data front, SNB will release its March decision at 19:30 AEDST. Several US economic data such as weekly jobless claims and Philly Fed Manufacturing Index will be out around midnight AEDST.

Have a great trading day!

Anthony


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