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Yesterday, the US dollar received one of the strongest blows in the last few weeks. Analyzing the dollar index (DXY) chart, there was a sharp change by 0.70%, namely from 92.00 to 91.34. The US dollar also updated its local low on March 11, and this is already considered as a panic sell-off.
It can be recalled that the Dollar Index (DXY) is the ratio of the US dollar (USD) to a basket of six currencies and is a weighted average of the dollar against the euro (EUR), Japanese yen (JPY), pound sterling (GBP), Canadian dollar (CAD) , Swedish krona (SEK) and Swiss franc (CHF).
Taking into account the dollar index, we draw conclusions depending on how the dollar behaved in the market and against its nearest competitors. It is worth noting that the sharp decline in the index led to a widespread sell-off of the US dollar in the market.
What was the impulse for the US dollar sales?
Analyzing the timing of the price surge against the US dollar, we can clearly say that massive sales were stimulated by the results of the Fed meeting, where the regulator briefly stated that an increase in the interest rate earlier than 2023 should not be expected.
Speculators considered these words right away, and started selling the US dollar in the market.
What happened on the trading chart?
The EUR/USD pair apparently hinted us about a possible rapid growth during the accumulation process within the range of 1.1882/1.1910, as a result of the breakout of the upper border and a speculative movement with a scale of 90 points.
The GBP/USD pair did not lag behind its counterpart in the market and also showed high speculative interest, with a scale of 115 points. This eventually led the quote to the area of the psychological level.
Trading recommendations for EUR/USD and GBP/USD on March 18
The economic calendar shows that the Bank of England has a scheduled meeting today, where the regulator will take a "dovish" position as usual and not do anything at the end of the process.
To simply put it, there will be a continued observation, says a member of the board.
On the other hand, speculators will closely monitor the result of the EU proceedings regarding the AstraZeneca vaccine. This is because details and facts about it can greatly affect the pound's value. Here, it is worth carefully following the information flow regarding a hot topic: AstraZeneca.
As for the statistics, the United States will release its weekly rates on unemployment claims. It is expected to decline, which will positively contribute to the recovery of the labor market, and then to the possible growth of the national currency.
USA 13:30 Universal time - Applications for benefits
Looking at the EUR/USD pair trading chart, it can be seen that the quote slowed down the growth within an important price level of 1.2000, which repeats the past natural basis. We can assume that there will be a high chance of a rebound, followed by a recovery of relatively recent impulse, if market participants fail to hold above the level of 1.2020 in the H4 chart.
As for the trading chart of the GBP/USD pair, the price movement within the borders of the psychological area 1.3950/1.4050, where the quote has already reached the coordinates of 1.4000, is shown. It can be recalled that buyers repeatedly entered into contact with sellers in this price area, which led to a slowdown and eventually a price rebound. If the regular basis of the past is repeated, another rebound towards the range of 1.3930-1.3890 will be possible.
We will consider an alternative scenario of the market development if the price holds above the level of 1.4020 in the H4 chart. In case that the 1.4050 coordinate is broken, we will most likely move towards the level of 1.4150.
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