Financial market research and analysis

The Federal Reserve and the Bank of Japan left their monetary policy unchanged, and we expect, in a few hours, the Bank of England to follow the same route, with interest rate unchanged 0.50% and monthly purchases in asset 375B. The traders could expect the BoE to provide comments regarding the Brexit as we stepped into the last week before the referendum, while later this evening the Governor Carney is due to speak during the Mansion House Banker’s dinner, in London.

The EURUSD trades below the 1.1298 resistance (50-day moving average), which, if surpassed, could encourage the pair to 1.1357 (Fibonacci retracement). First support is seen at 1.1238 (100-day moving average), if broken could cause a drop to 1.1200/1.1198 (major Fibonacci retracement).

Japan’s currency gained against all of its 31 major peers after the BoJ's Governor Kuroda and his board opted to continue to gauge the economic impact of their negative interest-rate policy ahead of an election next month. The yen surged 2.1% against the US dollar: the USDJPY traded down to 103.54 before finding buyers. A recovery is possible above the 105.00/105.40, and if the pair surpasses that level, we expect a further surge to 107.81 (Fibonacci retracement). Looking at the downside, the mid-term support is presumed at 100.00 mark.

The pound sterling weakened and approaches a two-month low, before the BoE meeting decision and a week away from the Brexit referendum. A two-week measure of pound-dollar volatility based on option prices surged to the highest level on record this week, as five polls in 24 hours showed more support for leaving the EU than for remaining. The mid-term trend on GBPUSD looks bearish, with next support seen at 1.4054 (Fibonacci retracement), if cleared could cause a further slump to 1.3900 mark, and to 1.3834 (Feb 29th low). Surpassing the important 1.4191 resistance (Fibonacci retracement) could pave the way for a recovery above 1.4300/1.4330 (100-day moving average).

The AUDUSD rallied to 0.7446 on the back of the dovish Fed, while the BoJ's verdict caused a U-turn and pulled the pair down to 0.7353. The first support is seen at 0.7326 (Fibonacci retracement). If the Aussie doesn’t hold on that level, we could see a further slump to 0.7287 (200-day moving average).

The Gold rally gained strength after the Federal Reserve scaled down its monetary policy outlook. The precious metal reached its highest level since August 2014 at 1315$/oz. According to a Bloomberg survey, it might even run higher in case of a Brexit scenario, while on the other side, a vote for remaining in the EU could cause a slide back to 1250$/oz.

The US inventories showed a contraction by 0.9M barrel instead of the -3.2M barrel forecasted. Oil prices are down for a sixth session in a row, with WTI moving to 47.24$ a barrel. The more dovish than expected Fed is for sure to be priced in, together with the concerns of Brexit, a week away from the referendum.