23.03.2023 10:23 AM
Trading plan for EUR/USD and GBP/USD on March 23

A 25 basis point rate hike was announced by the Fed on Wednesday. However, investors already expected it, so nothing really changed in the markets.

It was after the speech of Jerome Powell that dollar started to decline as his statements gave an impression that the central bank does not really know what to do. Of course, the Fed chairman tried to reassure everyone and downplay the situation, but judging from the quotes, the markets did not believe him. It is quite clear that the unprecedented crisis in the banking sector took a toll on the bank, which is a very frightening idea.

Interest rate (US):

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UK inflation also surprised everyone as instead of slowing down, it accelerated once again. This gave some intrigue to today's Bank of England board meeting, in which it is likely that the refinancing rate will be increased by another 25 basis points. However, there could be hints of further tightening in subsequent comments, which will mean that by the end of the year, the interest rate level in the UK will be higher than in the US. This will push pound up, and with it, the euro.

Interest rate (UK):

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EUR/USD hit 1.0900 immediately after it broke down 1.0800. This indicates that the pair is recovering the losses it had in February. However, the movement was quite rapid, not to mention signals are pointing that euro is overbought. This could result in a technical pullback later in the week, unless the upward momentum persists in the market. In that case, the pair will will head towards the local high in the medium term.

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GBP/USD jumped above 1.2300, indicating once again that buyers are looking to rebound from February's slump. Stable price retention above this level will allow a subsequent rise to a local high in the medium term. However, in the way is the level of 1.2300, where a reduction of the volume of long positions may occur.

Mark Bom,
Analytical expert of InstaForex
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