Yesterday, in the US session, the greenback was off to a bad start due to the terrible CPI (Consumer Price Index) and retail sales figures which all released in the red. Later, the Federal Reserve jumped in to underpin the US dollar.

Retail Sales & CPI – Downbeat Figures

It seems like US consumers are not in a buying mood seeing as US retail sales data missed the marks. Retail sales slid 0.3% in the month of May rather than the forecasted 0.1% uptick. The core retail sales also showed a 0.3% drop. 

The consumer price index also missed the mark and dipped by 0.1% instead of placing 0.2% gains. The slower inflation growth represents lesser demand, which is ultimately a sign of a weaker economy and lack of consumer confidence. People must be developing their saving habits ahead of Fed hawkish policy actions.

Highlights: Federal Reserve Policy Actions

Interest Rate – FED Fund Rate

Federal Reserve, the Central Bank of the United States, boosted interest rates by 0.25% from 1% to 1.25%, which came as no surprise. As stated in our previous update Forex Signals Brief for June 14th – FED Policy Decision Simplified, Get Ready To Trade! it was a highly anticipated policy action.

GDP (Gross Domestic Product) Forecast

In order to support the rate hike, they enhanced the projection for 2017 GDP from 2.1% forecast in March to 2.2% in June.

Unemployment Rate Projections:

• 2017 – 4.5% down to 4.3%
• 2018/19 down to  4.2%

Inflation Forecast

Inflation projections deprecated from 1.9% to 1.6%, whereas, PCE downgraded to 1.7% from 1.9%. Overall, the policy was hawkish and helped the dollar gain against peer currencies.

Top Economic Events To Watch Today

CHF    

• SNB Financial Stability Report (4:30)
• Libor Rate (7:30)
• SNB Monetary Policy Assessment (7:30)
• SNB Press Conference (7:30)

AUD    

• RBA Assist Gov Debelle Speaks (7:40)

GBP    

• Retail Sales m/m (8:30)
• MPC Official Bank Rate Votes (11:00)
• Monetary Policy Summary (11:00)
• Official Bank Rate (11:00)
• Asset Purchase Facility (11:00)
• MPC Asset Purchase Facility Votes (11:00)
• BOE Gov Carney Speaks (20:00)

EUR    

• Eurogroup Meetings (All Day)

CAD    

• Manufacturing Sales m/m (12:30)

USD    

• Unemployment Claims (12:30)
• Empire State Manufacturing Index (12:30)
• Import Prices m/m (12:30)
• Philly Fed Manufacturing Index (12:30)
• Capacity Utilization Rate (13:15)
• Industrial Production m/m (13:15)

NZD    

• Business NZ Manufacturing Index (22:30)

EUR/USD – A Planned 100 Pips Movement

The EUR/USD edged higher reaching a new high of $1.1295, violating the previous high of $1.1284. The jump in the pair was due to the fresh macroeconomic events from the United States. Let's have a quick look at the trade idea for today.

Forex Trading Signal – Idea

In our Forex Signals Brief for June 14th, the idea was to have a sell limit below $1.1285 with a minor stop loss of $1.1310 and a take profit of $1.1160 & $1.1100. Today, I'm sticking with the same plan. However, sellers are advised to drag their stop down into positive territory.

EUR/USD – Daily Chart 

Technical Outlook – Intraday

The major currency pair EUR/USD placed a new high of $1.1295 but failed to close above the major resistance level of $1.1285. The pair is again trading in the same trading range where it was before. For now, the immediate support is found at $1.1160 and the breakage of this support is likely to open further room for selling until $1.1110.   

GBPUSD – Most Focused Currency Pair Today

Today investors are keeping an eye on the BOE (Bank of England) as it likely to announce its monetary policy decision. At this point, the United Kingdom is facing a significant amount of uncertainty. The main factor to consider is the completely unnecessary snap election with resulted in mixed results. This was definitely the worst preparation for Brexit negotiations.

Policy makers are likely to meet today to discuss their upcoming plan, focusing on the ongoing developments in the UK.

In my opinion, the BOE will keep the rate unchanged and there will be no renewed inflation report since Mark Carney, the Governor of BOE, will not be holding a press conference.

Forex Trading Signal – Idea

I'm sticking with the old plan, $1.2775 is my favorite level to buy above and sell below. 

GBP/USD – Daily Chart Ahead Of BOE

Technical Outlook- Intraday

On the daily time frame, the pair is consolidating below a major resistance level of $1.2775. Essentially, the same level was working as a double bottom support level.

Both of our moving averages, 20 & 50 Periods, are emphasizing the downside bias of investors, perhaps, due to ongoing developments in the UK and recent strength in the US dollar.

Ending Remarks

In the Asian session, the market is likely to stay muted in response to the massive volatility yesterday.  It's time to get ready for the Bank of England & Swiss National Bank rate decisions. Though we aren't expecting any change, the SNB is known to surprise.