The pair closed Wednesday’s NY session at $1.3183 having bounced off initial FOMC react lows of $1.3169 to $1.3224 before drifting off into the close. Rate touched an early high at $1.3190 in Asian trade before continuing its drift lower, the rate stepping its way to an overnight low of $1.3166 before edging back above $1.3170 into Europe. Fed FOMC provided no real surprises, though some read into the text that they have left the door open to more QE. However, focus now shifts to the ECB rate decision at 1145GMT with a majority of market forecasters expecting a cut in the refirate by 25bps. If this occurs the deposit rate is expected to remain at zero while the lending rate is expected to move down by between 25-50bps. The corrective pullback off Wednesday’s highs of $1.3243 seen on market positioning for this, with unchanged rates likely to cause more initial react. Analysts attention on what Draghi will announce as regards lending to SME’s, noting that action could the euro back in favour. Support remains between $1.3165/60, more at $1.3145/40. Resistance $1.3185/90 ahead of $1.3215/20, with stronger interest between $1.3240/50.
EasyForexNews Research Team