Psychology for major markets Mar 18

EUR/USD – EUR/USD likely to hold close to 1.09 into the FOMC. Sentiment still fairly positive with equities holding firm, but may be downside risk from a more hawkish Fed.

USD/JPY – USD/JPY still firm on general USD strength and positive risk sentiment. Majority see no change in policy from BoJ this week, which would likely lead to a small JPY decline, while tightening would trigger sharper JPY gains.

EUR/GBP- EUR/GBP supported near 0.85, with softer UK labour market data supporting an upside bias, but more dovish tone from the BoE this week needed to generate upside progress. Long GBP positioning looks extended in CFTC data.

AUD/USD – AUD likely to see little impact from RBA, with focus still on regional risk sentiment but underlying picture mildly positive on global equity strength.

EUR/CHF – CHF risks still on the downside as SNB remain one of the more dovish central banks, valuation is very elevated and risks sentiment is positive. Outside chance of SNB easing this week.

Equities – US markets remaining close to all time highs helped by strong corporate earnings, but vulnerable to a decline in easing expectations after this week’s FOMC.