EUR/USD
The euro initially did try to rally a bit during the trading session on both Wednesday and Thursday, but we are starting to see a little bit of a pushback. That’s an interesting turn of events because the FOMC did cut by 25 basis points. But there’s also the question of whether or not they are dovish enough for the market. This was never going to be an interest rate decision that was about what they did. The market already knew that the reality is that Jerome Powell didn’t sound like he was going to give the market everything it wanted. And now there’s questions about will this cause demand for US dollars due to the fact that rates may not go as low as people initially thought. Furthermore, you also have to keep in mind that the other concern here is that if the US economy does slow down drastically, that means people will be buying the dollar. They’ll be buying US treasuries, and therefore it could cause a little bit of a top in the Euro. That’s not what I’m calling right now, but this price action, if we wipe out this big candle here from the Tuesday session, could be a warning signal that maybe we don’t go as high as it looked just a few days ago.
GBP/USD
The British pound looks like it is falling pretty significantly and early trading on Thursday as well. After the Bank of England was really not a surprise in any meaningful manner as we had one more member calling for a cut than anticipated. But really at the end of the day, we were nowhere near the situation where anything changed. But what this tells me is probably about the dollar. We form this nasty shooting star at 1.37 and have started falling. If we get any momentum here, we can find ourselves down at the 1.35 level and then eventually the 1.34 level. All things being equal. This is a market that will continue to be noisy, but you could make an argument that perhaps we are in the process of trying to form a bit of a double top here. So, this is one you’re going to have to watch. If we can break above the top of the shooting star from Wednesday, then that’s an extraordinarily bullish sign. I think at the very least though, we are likely to head back into consolidation here.
USD/CHF
The US dollar has rallied against the Swiss franc again, as we formed a nice hammer right below the support level during the trading session here on Wednesday, and now that we’re trading on Thursday, we’re seeing a bit of follow through. If we can take out the Tuesday candlestick, that could be the beginning of a bottoming pattern. Let’s be honest here, the Swiss franc is the currency that is the safety currency, but at the same time, we had formed a double bottom right here at the 0.79 level. So, we’ll see if this holds. We may head back up into consolidation here as well, as I think the general theme in these three currency pairs is simply that traders don’t really know what to do next. And more importantly, what the Federal Reserve is going to do. It wasn’t a situation where they came out and said multiple interest rates are coming. That may have caught people on the wrong foot.