The US Dollar remains firm ahead of the Federal Reserve’s interest rate decision, putting pressure on major currency pairs. EUR/USD weakens below 1.0950, GBP/USD retreats under 1.3000, and NZD/USD dips toward 0.5800. Meanwhile, USD/CAD rebounds as traders await the Fed’s updated economic projections and Chair Jerome Powell’s press conference for further cues.
KEY HIGHLIGHTS
- EUR/USD Drops Below 1.0950 Ahead of Fed Rate Decision.
- GBP/USD Retreats Below 1.3000 as Dollar Strengthens.
- NZD/USD Dips Toward 0.5800 Amid Weak Consumer Confidence.
- USD/CAD Rebounds to 1.4300 Ahead of Fed Projections.
Markets in Focus Today
EUR/USD: Euro Under Pressure Below 1.0950 Ahead of Fed Decision
EUR/USD declines toward 1.0935 during Wednesday’s Asian session as the US Dollar (USD) sees a modest rebound. Investors remain cautious ahead of the US Federal Reserve’s (Fed) interest rate decision later in the day.
Key Market Drivers:
- The Greenback finds support from stronger-than-expected US economic data, including a 0.7% rise in US Industrial Production for February, surpassing market expectations of 0.2%.
- The Fed is expected to maintain current interest rates, but the focus will be on the Press Conference and Summary of Economic Projections (SEP), particularly the ‘dot plot,’ which outlines future rate trajectory.
- In Europe, Germany’s parliament approved a large spending initiative, which could provide some support to the euro by revitalizing investment after two years of economic contraction.
Technical Analysis:
- Moving Averages (Exponential & Simple): All key moving averages (10, 20, and 50) signal a bullish trend.
- RSI (Relative Strength Index): 71.43 (Buy Zone – Bullish)
- Stochastic Oscillator: 96.32 (Buy Zone – Neutral)
- Support & Resistance Levels:
- Resistance: R1: 1.0493 | R2: 1.0568
- Support: S1: 1.0249 | S2: 1.0174
Trade Suggestion:
- Limit Buy: 1.0856
- Take Profit: 1.0960
- Stop Loss: 1.0806
GBP/USD: Pound Retreats Below 1.3000 as Fed Decision Looms
GBP/USD trades near 1.2980 during Wednesday’s Asian session, struggling amid a strong US Dollar (USD) and steady US Treasury yields.
Key Market Drivers:
- The US Dollar Index (DXY) hovers near 103.40, supported by stable 2-year and 10-year Treasury yields at 4.04% and 4.29%, respectively.
- Traders are closely monitoring the Federal Reserve’s economic projections, as hawkish signals could strengthen the USD further.
- Meanwhile, the British Pound (GBP) remains under pressure ahead of the Bank of England’s (BoE) interest rate decision on Thursday. The BoE is widely expected to hold rates steady at 4.5%, with a 7-2 vote split among policymakers.
Technical Analysis:
- Moving Averages (Exponential & Simple): Bullish crossover across all timeframes.
- RSI (Relative Strength Index): 68.58 (Buy Zone – Bullish)
- Stochastic Oscillator: 95.67 (Buy Zone – Neutral)
- Support & Resistance Levels:
- Resistance: R1: 1.2691 | R2: 1.2801
- Support: S1: 1.2335 | S2: 1.2225
Trade Suggestion:
- Limit Buy: 1.2941
- Take Profit: 1.3010
- Stop Loss: 1.2909
NZD/USD: Kiwi Dips as Consumer Confidence Declines
NZD/USD trades near 0.5810, struggling for the second consecutive session as consumer sentiment weakens.
Key Market Drivers:
- The Westpac New Zealand Consumer Confidence Index dropped to 89.2 in Q1 2025, its lowest level since Q2 2024.
- Rising trade tensions, persistent cost-of-living pressures, and financial market volatility weigh on the Kiwi.
- Traders await New Zealand’s quarterly GDP data release on Thursday, expected to show a 0.4% rebound in Q4.
- Meanwhile, the US Dollar (USD) remains firm, supported by stable Treasury yields ahead of the Fed’s rate decision.
Technical Analysis:
- Moving Averages (Exponential & Simple): Bullish momentum across all timeframes.
- RSI (Relative Strength Index): 63.45 (Buy Zone – Bullish)
- Stochastic Oscillator: 92.52 (Buy Zone – Neutral)
- Support & Resistance Levels:
- Resistance: R1: 0.5726 | R2: 0.5787
- Support: S1: 0.5531 | S2: 0.5471
Trade Suggestion:
- Limit Buy: 0.5772
- Take Profit: 0.5867
- Stop Loss: 0.5725
USD/CAD: US Dollar Rebounds from Two-Week Low
USD/CAD rises above 1.4300, extending its recovery ahead of the Federal Reserve’s rate decision.
Key Market Drivers:
- Market positioning ahead of the Fed event supports modest USD gains.
- Weaker Crude Oil prices weigh on the Canadian Dollar (CAD), providing additional support to USD/CAD.
- Geopolitical risks in the Middle East could disrupt oil supply, limiting downside pressure on crude prices.
Technical Analysis:
- Moving Averages (Exponential & Simple): Bearish trend across key timeframes.
- RSI (Relative Strength Index): 47.74 (Neutral Zone – Neutral)
- Stochastic Oscillator: 19.94 (Sell Zone – Neutral)
- Support & Resistance Levels:
- Resistance: R1: 1.4715 | R2: 1.4866
- Support: S1: 1.4224 | S2: 1.4073
Trade Suggestion:
- Limit Sell: 1.4358
- Take Profit: 1.4263
- Stop Loss: 1.4433
Elsewhere in the Forex Market
- AUD/USD down 0.23% to 0.6346
- USD/CHF up 0.01% to 0.8767
- EUR/GBP down 0.03% to 0.8414
- EUR/AUD up 0.04% to 1.7210
- AUD/NZD up 0.01% to 1.0930
- USD/CNY up 0.01% to 7.2343
- AUD/SEK up 0.12% to 6.3957
Key Economic Events & Data Release Today
- (JPY) BoJ Interest Rate Decision: Forecast 0.50%, Previous 0.50% – 08:00 GMT
- (EUR) Core CPI (YoY) (Feb): Forecast 2.4%, Previous 2.5% – 15:30 GMT
- (USD) FOMC Statement & Fed Interest Rate Decision: 23:30 GMT
Final Thoughts
The forex market remains highly volatile ahead of the Fed’s decision, with major pairs reacting to economic data and policy expectations. Traders should stay cautious and closely monitor key levels and news events for market direction.