The most recent US economic data has kept up the dollar strength against its main competitors. While the EUR/USD continued to range between the resistance line at 1.3580 and the yearly lows at 1.3500, the levels of GBP/USD has remained steady around the 1.70 level.

The focus of the forex market now will be on the US Federal Reserve policy decision and even though the market has already priced in a gradual and steady reduction in quantitative easing (QE), the Fed is also anticipated to change its predictions that could increase the impact on the dollar.

“Lower unemployment rate, higher Inflation and poorer gross domestic product. A forecast of higher inflation and lower unemployment implies that the Fed is moving closer to achieving their targets and if Janet Yellen acknowledges that in her press conference, the dollar should expand its gains against all major currencies”, stated Kathy Lien, at BK Asset Management.

In this scenario, from a technical analysis standpoint, when the EUR/USD moves below 1.3480 -2014 lows, the cross will find the essential trend support from the 2012 lows at 1.2045, which now comes in only above 1.3450.

On a technical stance, the intraday graphs are currently giving more negative signs and we favour a break of the 1.3454 -2012-2014 up trend, which is considered to be the crucial break down point for a fall to 1.2750.

For GBP/USD, a modest corrective set back occured, but drops lower are signaled to complete ahead of 1.6905/1.6875 for an attempt on the 1.7041/51 2009 high, 2005 bottom rate.