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The dollar rebounded from lows against the euro and sterling as the market stepped back

Dollar Off Lows as Market Digests FOMC

The dollar rebounded from lows against the euro and sterling as the market stepped back and think over about the Fed statement after yesterday??™s policy meeting. The dollar edged off a two year low at 1.3410 against the euro to around 1.3320. The sterling also pared its earlier gains versus the dollar.

The market calmed down today after yesterday??™s dollar sell off following the FOMC and took a second thought of the Fed statement. Though the Fed dropped a previous reference to further tightening in monetary policy, they did warn the risk of inflation and maintain their views on the economy. They said recent core inflation seems elevated, and the economy grows modestly. The Fed is not likely to cut its benchmark rates in the first half of this year.

In early US session, the dollar reacted modestly to the US data released. The weekly jobless claims reduced from 318k to 316k, better than the estimate of 324k. The Conference Board??™s leading indicators fell 0.5% in February, down from a revised 0.3% decline in the previous month.

EURUSD will face interim resistance at 1.3350, followed by 1.3380 and 1.34. Additional ceilings will emerge at 1.3420, backed by 1.3450. Support starts at 1.33, backed by 1.3270, 1.3250 and 1.32. Subsequent floors are eyed at 1.3150.

USDJPY encounters interim resistance at 118.30, backed by 118.50 and 118.70. Subsequent ceilings will emerge at 119, followed by 119.30 and 119.50. On the downside, support begins at 118 and 117.70, followed by 117.50. Additional floors are eyed at 117.20, backed by 117 and 116.50.

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