Fed decision day

The Fed’s interest rate decision is set to take place later on today and is set to be one of the main highlights of the week. The majority of participants have all but priced in that the Fed may remain on hold, with FFF currently implying a 99% probability for such a scenario to materialize. Therefore our attention turns to the bank’s accompanying statement and Fed Chair Powell’s presser following the bank’s decision. The tone and remarks by Fed Chair Powell and the bank’s accompanying statement could influence the dollar’s direction, where should the bank imply that they may remain on hold for a prolonged period of time and thus cast doubt on the expected rate cut in June, it could aid the greenback. On the other hand, should the Fed be perceived as willing to cut rates then it may have the opposite effect. In our view, the heightened uncertainty and ever-changing dynamic in the trade wars between the US and other nations may have increased uncertainty over the US’s and the global economic outlook, which in turn could increase pressure on the Fed to remain on hold. Furthermore, President Trump’s intentions to implement reciprocal tariffs on the 2nd of April may further intensify the uncertainty surrounding the impact of tariffs on the economy. Over in Australia, the nation’s employment data is set to be released in tomorrow’s Asian session and could thus influence the Aussie. The current expectations are for the unemployment rate to remain steady at 4.1% with the employment change figure expected to showcase a loosening labour market with the figure expected to come in at 30k which would be lower than the prior figure of 44k. Hence should the employment data showcase a loosening labour market in may weigh on the AUD and vice versa.

US500Cash, appears to be moving in a downwards fashion. We opt for a bearish outlook for the index and supporting our case is the RSI indicator below our chart which still registers a figure close to 30, implying a bearish market sentiment. For our bearish outlook to continue, we would require a clear break below the 5685 (S1) support level with the next possible target for the bears being the 5410 (S2) support line. On the flip side for a bullish outlook, we would require a clear break above the 5685 (R1) resistance line with the next possible target for the bulls being the 5820 (R2) resistance level. Lastly for a sideways bias we would require the index to remain confined between the 5540 (S1) support level and the 5685 (R1) resistance line.

USD/JPY appears to be moving in an upwards fashion after clearing our support now turned to resistance that the 148.95 (S1) level. We opt for a bullish outlook for the pair and supporting our case is the upwards moving trendline which was incepted on the 11th of March. However, the RSI indicator currently registers a figure of 50 which may imply a neutral market sentiment. Nonetheless, for our bullish outlook to continue we would require a clear break above the 151.40 (R1) resistance line with the next possible target for the bulls being the 154.30 (R2) resistance level. On the other hand, for a bearish outlook we would a clear break below the 148.95 (S1) support level with the next possible target for the bears being the 146.50 (S2) support line. Lastly, for a sideways bias we would require the pair to remain confined between the 148.95 (S1) support level and the 151.40 (R1) resistance line.

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Today we get Germany’s ZEW indicators for March, New Zealand’s biweekly Milk auctions Canada’s CPI rates for February, from the US the February’s construction data and industrial production growth rate and just before tomorrow’s Asian session, New Zealand’s current account balance for Q4. In tomorrow’s Asian session, we get from Japan’s machinery orders for January, February’s trade data and the highlight is to be BoJ’s interest rate decision.