The theme of dollar weakness continues to support risk assets and higher yielding currencies as the U.S. is yet to show commitment regarding its Fiscal and Monetary tightening going forward. With currency markets in a subdued mode ahead of the FOMC announcement and subsequent Bernanke press conference, the better than expected UK GDP provided the only decent trading opportunities in GBPUSD, however, the EURUSD remains contained in its range as interest rate differentials and risk appetite continues to maintain the common currency at its highs.
Fundamentally and technically the market seems to have priced in a dovish stance by the Federal Reserve and the price action is likely to remain contained unless an unexpected hawkish stance on monetary policy leads to a substantial retracement in dollar weakness.
