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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Analysis]: The US dollar rebounded after the Federal Reserve, and the focus turned to the Bank of England." Hope it will be helpful to you! The original content is as follows:
Earlier Thursday, the US dollar (USD) strengthened against other currencies. The Bank of England (BoE) will announce the interest rate decision later that day, and Bank of England Governor Andrew Bailey will hold a press conference. The U.S. Economic Calendar will release the number of first-quarter weekly unemployment claims and unit labor costs data.
The Federal Reserve announced on Wednesday that after the May meeting, the policy interest rate and federal funds rate will remain unchanged in the range of 4.25%-4.5%. This decision is in line with market expectations. In its policy statement, the U.S. central bank pointed out that uncertainty in the economic outlook has increased further. Speaking at a post-conference press conference, Fed Chairman Jerome Powell pointed out that inflation expectations have risen in the near future due to tariffs, adding that it is time for them to wait for policy adjustments. According to the CMEFedWatch tool, the possibility of a 25 basis point (bps) rate cut in June fell to 20% from about 30% before the Fed meeting. In turn, the US dollar index closed up, ending its three consecutive days of decline. In early Thursday, the U.S. dollar index rose more than 0.2% on the day above 100.00.
At the same time, U.S. President Donald Trump said a "major press conference" will be held at 1,400 GMT on Thursday, involving a major trade deal with representatives of "big powers and highly respected countries." Both the Wall Street Journal and the New York Times reported that the announcement is likely about a trade deal with the UK. In addition, a British government official confirmed earlier on Thursday that U.S. President Donald Trump is expected to announce the U.S.Outline of the UK-China trade agreement.
The market generally expects that the Bank of England will lower its policy by 25 basis points from 4.5% to 4.25%. The GBP/USD fell more than 0.5% on Wednesday, erasing most of its weekly gains. Earlier on Thursday, the pair fell slightly lower on the day, falling below 1.3300.
Euro/USD continued to move lower after a decline of about 0.6% on Wednesday and traded in a negative area below 1.1300 early Thursday. Data from Germany showed that industrial production rose by 3% month in March. This figure was better than market expectations by 0.8%, but failed to help the euro strengthen.
The minutes of the Bank of Japan's (BoJ) policy meeting in March showed that members agreed that the Bank of Japan would continue to raise interest rates if its economic and price outlook was to be realized. The USD/JPY continued its rebound after rising about 1% on Wednesday and traded around 144.50 to start the European session.
In the commodity market, oil prices rebounded after falling more than $1 on Wednesday. U.S. crude futures rose 0.7% to $58.50 a barrel, while Brent crude rose 0.6% to $61.50 a barrel.
In precious metals, gold rose 0.3% to $3,375, although uncertainty about the Fed's policy outlook remained, but it still did not reach its record high of $3,500.
Euro: The intraday bias of the euro/dollar remains neutral at this point. On the downside, below 1.1265 will resume a correctional decline from the short-term top 1.1572. But the downside space should be bound by the 38.2% retracement level of 1.1039 from 1.0176 to 1.1572. On the plus side, breaking through 1.1424 will indicate that the correction has been completed and the 1.1572 high is retested.
Yen: The intraday bias of the US dollar/yen is currently neutral. The rebound from 139.87 may continue to 145.90. But as long as the 38.2% retracement level of 147.12 from 158.86 to 139.87 remains unchanged, the outlook will remain bearish in case of further resumptionrebound. On the downside, a firm breakthrough of 141.96 will indicate that the rebound from 139.87 has been completed. In this case, 139.87 should be retested next.
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