GBP/USD Pre-FOMC

• faithmight
• March 16th, 2010

FOMC is later today and naturally I want to size up the market before their decision is released. The market expects the FOMC meeting results to be USD positive. Even if the Fed passes on an all-out interest rate hike, the language of the statement, given the economic releases since the last meeting, should be bullish for the US dollar.

For the $GBPUSD, the 1.5000 level looks to be the area of truth. The cable rally that I anticipated last week fizzled above 1.5200 after 2 attempts in trying to get to the coveted 1.5250 level. The market seems to have settled around 1.5050 heading into the FOMC decision. Despite the daily close above 1.5000, 1 signal of continued USD strength is continued rejection of 1.5075. A 2nd signal is that price remains below the 38.2% Fibonacci level of yesterday’s 180 pips move from 1.5206 to 1.5017. A break of 1.5000 targets 1.4930/40 level  of ST support while most bears have their eye on 1.4870. On the upside, watch 1.5112, the 50% retracement level of yesterday’s move.

Remember with news this big, trade the reaction, not the headine. And, of course, always trade what you see, not what I think!

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Tickers: FOMC, GBPUSD

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