EUROPEAN session review: markets wait for Fed decision

Data released (actual, consensus, previous):                   

08:30 GMT Bank of England Minutes      

The U.S. dollar continues to fall against the main European currencies, ahead of highly anticipated guidance from the U.S. Federal Reserve on what it plans to do with its bond-buying program.

A statement is expected after the European markets close, followed by a press conference by Chairman Ben Bernanke, where market participants will be looking for any hints about tapering the bank’s quantitative easing program.

EURO:

Eurozone officials said today they  won’t revise Cyprus bail out conditions after requests from the  Cypriot President Anastasiades yesterday for a complete revamp of the Eur 10 bln bailout, where the country economy and banking system have been severely damaged, by the conditions imposed on the island.

EUR/USD is on highs above $1.3400.  Above $1.3400 (initial resistance, Jan 14 highs) resistance comes at $1.3450/80, then - near $1.3540 (channel resistance line from May 29).

Initial support remains at the channel line from May 29, coming now at $1.3350. Below support is around $1.3280 (Jun 13 lows), $1.3200 and $1.3170 (Jun 10 lows).

POUND:

The MPC minutes have shown once again the same voting pattern to keep interest rate intact at 0.5%, 9-0, and 6-3 in favour of leaving the asset purchase programme unchanged at £375 billion, with King, Fisher and Miles advocating for an increase to £400 billion.

GBP/USD tested support at $1.5600 and bounched back. Next supprt is at of $1.5565 (low Jun.18) and finally $1.5521 (low Jun.11). On the upside, a break above $1.5696 (MA200d) would open the door to $1.5723 (high Jun.18) and then $1.5753 (high Jun.17).

YEN:

Bank of Japan Governor Haruhiko Kuroda said on Wednesday during a semi-annual parliamentary hearing in Tokyo that the central bank would maintain its current monetary policy until a sharp change occurs in the economy. Even though the situation of the economy remains uncertain, the BoJ governor sees it starting to recover gradually in the nearest future while financial markets return to stabilization.

USD/JPY is testing Y95.00. Minor support placed at Jun 17 lows on Y94.30, extending to Y93.80 (Jun 13 lows). Below support comes at Y93.50 (Mar 25 lows) and then - at Y92.50 (Apr 2 lows). Above Y95.80 resistance is around Y96.20 (Jun 12 hourly highs) and Y97.00 (Jun 12 highs).

DATA AHEAD:

At 18:00 GMT   Fed Interest Rate Decision  is expected along with FOMC Economic Projections.   

Fed's Monetary Policy Statement and press conference will start at 18:30  GMT.

NZ  Gross Domestic Product is expected at 22:45 GMT.

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