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- USD / JPY is in the 110.57 / 75 range, consolidating the Fed's move.
- USD / JPY has fallen below trendline support and is now taking the next key support at current levels.
Market participants were looking for a mildly aggressive approach to find that the Fed did not expect rates to rise until 2020, which would have lowered the dollar. The DXY has gone over 96.50 and cut a new low below the Feb. 28 low, losing the round of 96 for the first time since. The 10-year US yield fell sharply from 2.59% to 2.52%, after reaching 2.61% before the Fed. At the same time, the Fed's balance sheet will end in September and many did not expect this to happen soon – GDP forecasts were also revised downward.
Shares on Wall Street ended mainly down Wednesday, following a negative start to the session. One of the biggest weights at the start of the day was the FedEx Corp.'s bearish opening spread. FDX, which had reached 168.70 at one point, after a fall of 181.49 yesterday – The title is often seen as a barometer of global growth prospects – (The logistics company missed the Wall Street forecast for its third fiscal quarter).
- The S & P 500 SPX, -0.29% ended a decline of 0.3% nearly 2,824.
- The DJIA index, Dow Jones Industrial Average, -0.55% lost more than 140 points, or 0.5%, to end around 25,746.
- The Nasdaq Composite COMP, + 0.07%, recorded a gain, finishing 0.1% higher near 7,729.
Key notes from the Fed:
The latest median forecast of the Federal Reserve:
- 2019 GDP 2.1% vs 2.3% in December
- GDP 2020 of 1.9% vs 2.0% in December
- 2021 GDP 1.8% vs 1.8% in December
From the declaration
Federal Reserve issues FOMC statement – March 20 – full text
- Over 12 months, headline inflation declined, mainly due to lower energy prices; Inflation of products other than food and energy remains close to 2%.
- Overall, market – based inflation – offset measures have remained weak in recent months, and measures of long – term survey – based inflation expectations have not changed much.
- The Committee decided to maintain the federal funds rate target range of 2-1 / 4 at 2-1 / 2%.
- The Committee believes that the most likely results are a sustained expansion of economic activity, favorable labor market conditions and inflation close to the symmetrical 2% target of the Committee.
- In light of global economic and financial developments and moderate inflationary pressures, the Committee will be patient as it will determine what future adjustments to the federal funds target range might be appropriate to support these results.
USD / JPY
From a technical point of view, Valeria Bednarik, FXStreet's chief badyst explained that parity is now bearish in the near term, as in the 4-hour chart, it fell below its 100 and 200 SMAs, below the latter for the first time since at the beginning of February. The technical indicators in the chart are heading south almost vertically, now in oversold territory, with the pair losing about 100 pips in a few hours. The decline should now continue as long as the pair remains below the 111.00 mark.
- Support levels: 110.45 110.10 109.80
- Resistance levels: 111.00 111.45 111.80
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