28 Apr 2015
USD under pressure ahead of FOMC – TDS
FXStreet (Edinburgh) - Strategists at TD Securities assessed the potential scenarios for the greenback in light of the FOMC statement due tomorrow.
Key Quotes
“The USD looks very delicately poised ahead of the FOMC meeting, which gets underway today”.
“This meeting is not “live” in a policy sense but the USD will take its cue from what the Fed’s statement implies about the outlook; a nod to the recent softness in the data would not be a great surprise but any hint of a delay in lift-off would still likely pressure the USD, given that broader market positioning is still heavily biased to USD longs”.
“On the other hand, a steady-as-she-goes message, indicating that the Fed is looking through the recent weakness in the data as a temporary phenomenon and which keeps the H2 lift-off timetable intact would be more of a surprise for investors”.
“At this point, the DXY looks poised to weaken further; the correction/ consolidation over the past 6-weeks or so leaves the index resting on (or just below) major support at 96.50 right now and the market is poised to close below the 40-day MA for a fourth consecutive session today (something not seen since July 2014); momentum traders are very likely paying close attention and it will not take much (in terms of further DXY weakness) to prompt a “pile on” short trade from this sector of the market and a broader about the USD’s near-term direction from the analyst community”.
Key Quotes
“The USD looks very delicately poised ahead of the FOMC meeting, which gets underway today”.
“This meeting is not “live” in a policy sense but the USD will take its cue from what the Fed’s statement implies about the outlook; a nod to the recent softness in the data would not be a great surprise but any hint of a delay in lift-off would still likely pressure the USD, given that broader market positioning is still heavily biased to USD longs”.
“On the other hand, a steady-as-she-goes message, indicating that the Fed is looking through the recent weakness in the data as a temporary phenomenon and which keeps the H2 lift-off timetable intact would be more of a surprise for investors”.
“At this point, the DXY looks poised to weaken further; the correction/ consolidation over the past 6-weeks or so leaves the index resting on (or just below) major support at 96.50 right now and the market is poised to close below the 40-day MA for a fourth consecutive session today (something not seen since July 2014); momentum traders are very likely paying close attention and it will not take much (in terms of further DXY weakness) to prompt a “pile on” short trade from this sector of the market and a broader about the USD’s near-term direction from the analyst community”.