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  • Writer's pictureMike Paterson

Markets price in dovish Fed

Thursday 23 March 2023

Another rollercoaster 24 hours as the jury remains out after the US Fed announced a 25bps rate hike as expected but with some dovish tones amid the banking sector concerns that have seen markets price in rate cuts even though Fed Chair Powell ruled out any this year. This morning the SNB hiked by 50bps as mostly expected and the decent rate hike that I have been warning about in my CHF summaries here for a while now.

BOE the next CB up the ramp at 12.00 GMT today with markets pricing in a 25bps hike with yesterday's higher inflation data in the UK giving them plenty to think about. Watch for the voting numbers as always. Expect continued cautious tones overall.

Equities plunged post-FOMC but have steadied and rallied a little since while WTI has found a base at $69.00 then $69.80-00 but failing to hold above $71.30 as the fragile/fickle risk tones remain. Gold duly held the old support of $1930 and a solid rally to test $1980-85 so far as the uncertainty returns. Ukraine/Russia war continues to be the main geo-political elephant in the room with ongoing US/China tensions in the mix too.

Remember, focus on the price action and let the algos do the heavy lifting/dropping. The important thing is to identify your preferred risk/reward entry/exit levels prior and be poised to execute.

GBPUSD: Holding 1.2220 again yesterday then 1.2250-60 and a decent rally to 1.2340 amid some USD supply but tempered by some softer risk GBPJPY supply. The decent offers/resistance at 1.2300-30 now history but a few re-sells duly placed again up here and I remain a rally seller still albeit continuing with some caution into BOE. EURGBP: A solid rally from 0.8770 yesterday as some EUR demand returned but capping into 0.8860 this time as a little GBP demand returns. Expect some more two-way trading as core pairs and risk both fluctuate. BOE in focus too.. Large options interest at 0.8900 in play potentially. GBPJPY: Support line in at 160.50 this time after failing around 163.30 with rally sellers poised as the uncertainty/fickle sentiment continues and core pairs head into reistance areas too.

EURUSD: Holding 1.0780 and a decent rally post-FOMC to test 1.0925 amid the USD supply. I remain a rally seller as my preferred side but some caution required still. USDJPY: A decent support line forming at 130.50 this time in the retreat from the failure at 133.00 then 132.50 post-FOMC amid the USD supply and softer risk tones . I continue to favour rally sells and being long JPY on the crosses too overall.

More detailed analysis across many pairs from

Interbank rates: 08.37 GMT GBPUSD 1.2325 EURUSD 1.0900 EURGBP 0.8846 GBPEUR 1.1303 USDJPY 131.21 GBPJPY 161.73

GBPCAD 1.6878

GBPCHF 1.1272

GBPZAR 22.2914

GBPHKD 9.5973 EURCHF 0.9950

EURHKD 8.4856 AUDUSD 0.6730 NZDUSD 0.6281 USDCAD 1.3670 USDCHF 0.9135

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