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USDJPY (110.23): The USDJPY currency pair was seen failing to make any further gains after price action was seen trading near the resistance level of 110.62. The doji and the reversal candlestick pattern on the 4-hour chart was followed by weaker price action. We expect the downside to prevail at the moment as USDJPY is likely to push lower on the day. The support level at 109.57 is the most likely downside target while any gains are likely to be limited to the 110.62 resistance.

EURUSD (1.1802): The EURUSD currency pair was seen holding to the gains after once again testing the support level at 1.1730. Price action was moderately bullish with the daily session posting a bullish engulfing candlestick pattern. This indicates a possible move to the upside. On the 4-hour chart, price action continues to trade flat within 1.1824 - 1.1730 level ahead of the ECB's meeting. The downside target is seen at 1.1610 while a breakout above 1.1824 could signal a move toward 1.2232 level.

The U.S. dollar was seen trading weaker on Wednesday following the FOMC statement where the central bank hiked interest rates by 25 basis points as widely expected.

The FOMC also announced that it was looking to squeeze in an additional rate hike for the fourth time this year. While the markets were volatile, the greenback settled lower following a push to intraday highs.

The European Central Bank's monetary policy meeting is scheduled to be held today. Focus turns to the ECB as policymakers'debate ending or tapering the QE program. As previously announced, the ECB is expected to end its 30 billion euro bond purchase program this September.

Besides the rate statement and the press conference, the ECB officials will also be releasing the economic forecasts as well.

On the economic front, the final inflation figures from France and Germany will be coming up today followed by retail sales data from the UK. In the U.S. trading session, retail sales report is forecast to show a slight improvement with headline retail sales expected to rise 0.4% while core retail sales is expected to rise 0.5% on the month.

USDJPY has come under renewed selling pressure today, falling below the three-week high of 110.85, achieved during Wednesday’s US session. The price failed to end the previous candle in green and fell once again below the 200-day simple moving average (SMA) in the near term.

Looking at momentum oscillators on the daily chart though, they suggest further declines may be on the cards in the short-term. The RSI is above its neutral 50 line, detecting negative momentum, and is also pointing downwards. The %K line of the stochastic oscillator posted a bearish cross with the %D line, suggesting further losses are nearing. Additionally, the 20-day SMA is turning slightly lower approaching the 40-day SMA for a negative cross in the next few days.

Should the pair manage to strengthen its negative momentum, and fall below the moving averages and the 38.2% Fibonacci retracement level of 109.90 of the downleg from 118.60 to 104.60, the next support could come around the 108.65. This area has been a strong obstacle in the past as the price failed to have a closing day below it in the last one-and-a-half month. A break below 108.65 would shift the short-term bias to a more bearish one and open the way towards the 108.10 mark. Below this level, the next target could come in the 107.80 – 107.90 region. The latter level is the 23.6% Fibonacci region.

However, if the prices are unable to dive below the 38.2% Fibonacci, the risk would shift back to the upside in the near-term with the 110.85 resistance coming into focus. A jump above this zone would signal a resumption of the latest uptrend that’s has been developing since the rebound on the 104.60 support. The next key resistance to watch is the 111.40 barrier.

Broadly, USDJPY has been trading within a downward sloping channel since December 2016, with a break outside it likely to determine the next trend direction.

Here are the latest developments in global markets:

FOREX: The US dollar index is nearly 0.3% lower on Thursday, extending losses from the previous session. Although the Fed raised rates and upgraded its rate-path projections to signal one additional hike this year, Chairman Powell played down these hawkish signals in his press conference. The outcome was a softer dollar overall. Meanwhile, haven currencies like the Japanese yen and Swiss franc are higher today, following reports the US will proceed with slapping tariffs on China

STOCKS: US markets closed lower on Wednesday, weighed on by some relatively hawkish signals from the Fed and media reports suggesting the US will likely proceed with slapping tariffs on China tomorrow. The Dow Jones and S&P 500 dropped by 0.47% and 0.40% respectively, while the Nasdaq Composite was more resilient, declining only by 0.11%. Futures tracking the Dow, S&P, and Nasdaq 100 suggest these indices are likely to open lower today as well. Asia was a sea of red as well on Thursday. Japan's Nikkei 225 and Topix fell 0.99% and 0.92% correspondingly, while in Hong Kong, the Hang Seng tumbled by 1.17%. The pessimism looks set to roll over into European trading as well, as futures indicate that all the major indices are set to open notably lower.

COMMODITIES: In energy markets, oil prices are lower on Thursday, giving back some of the gains they posted yesterday on the back of bullish EIA inventory data. WTI is down by less than 0.1% today, while Brent is trading nearly 0.4% lower. More broadly, focus remains on how major producers will act at next week's OPEC meeting, with headlines yesterday suggesting Saudi Arabia is considering a range of options regarding how much to raise output and over what timeframe. In precious metals, gold is trading 0.1% higher today, currently hovering just above the $1,302 mark. Prices rose yesterday in the aftermath of the Fed gathering as the dollar lost ground, but the gains were short of impressive and the metal remains stuck in the narrow range it has established in recent weeks.

Major movers: Fed's Powell sends the dollar lower after hike; trade concerns resurface

The Fed raised interested rates for a second time this year yesterday, as was widely anticipated, and revised higher its rate-path projections for 2018 to signal four rate increases in total, from three previously. The so-called “dot plot” indicated that now eight policymakers anticipate at least four hikes in 2018, in contrast to seven members back in March. In other words, one official raised their “dot” as she/he became more optimistic on the outlook, which was enough to push the median “dot” higher. In terms of economic forecasts, all changes were hawkish. The unemployment rate for 2018 was revised lower, while the forecasts for GDP growth and the core PCE price index for the year were raised slightly.

The dollar strengthened immediately on the decision, but the surge was short-lived. The US currency started to give back its gains to trade even lower in the following minutes, after Fed Chairman Powell stepped up to the rostrum and downplayed these hawkish signals. He noted it is “too soon to declare victory on inflation”, and that although inflation is likely to run above 2% in the coming months due to higher oil prices, the Committee will not overreact to such an overshoot. Also of interest, he announced the Fed will hold a press conference at every meeting from January onwards.

The key takeaway was that the US economic picture continues to improve, and that if things play out as projected, it wouldn't be surprising to see another two rate hikes this year, likely in September and December. That comes with a caveat though; it's still a close call whether the Fed will deliver as many hikes as its “dot plot” now suggests – remember that just one official raised their projection, and that person may not even hold voting rights this year. Reflecting this uncertainty, markets have fully priced in one more 25bps hike for 2018, but see only a 44% probability for a second one.

On the trade front, media reports suggest the US will proceed with slapping tariffs on $50bn Chinese imports. The announcement is due on Friday and is likely to provoke a symmetrical retaliation from Beijing, potentially reigniting fears of a trade war and unleashing another wave of risk aversion. Indeed, markets seem to be gearing up for such an escalation, as safe-haven currencies like the yen and Swiss franc are higher today, while Asian stock indices are lower.

Elsewhere, aussie/dollar is down by nearly 0.35% on Thursday, after Australia's employment data for May were a touch softer than anticipated. Softer-than-expected Chinese data overnight relating to retail sales, investment, and industrial output may have contributed to the slide in the Aussie and Asian stocks as well.

Day ahead: ECB firmly in focus; US & UK retail sales also on the agenda

The conclusion of the European Central Bank's meeting on monetary policy is the highlight out of Thursday's calendar. Retail sales data out of the US and the UK are also of importance though and are anticipated to lead to positioning in FX markets.

Krona pairs will be in focus at 0730 GMT as Sweden sees the release of inflation figures for May.

UK retail sales data for the month of May will be hitting the markets at 0830 GMT. Both headline, as well as the core measure of sales that excludes fuel, are anticipated to grow at a faster pace annually and slow down on a monthly basis relative to April. The odds for an August rate hike by the Bank of England currently run at 41% according to UK overnight index swaps; a data beat can stoke those expectations, supporting sterling, and vice versa.

The ECB's rate decision is due at 1145 GMT. No change in rates is expected, with market attention turning on the outcome of policymakers' discussion on the timing of putting an end to the Bank's asset purchase programme. If for example the central bank makes an announcement on ending the programme by year-end, then the euro is expected to appreciate. Mario Draghi's press conference will commence at 1230 GMT. If one were to extrapolate from past conferences, market sensitive comments are “on the agenda”.

The US will be on the receiving end of retail sales data for May at 1230 GMT. Sales are expected to grow by 0.4% m/m in May, double April's growth rate. Meanwhile, the measure of sales that excludes automobiles – core retail sales – is projected to expand by 0.5% on a monthly basis, after rising by 0.3% in April. Other figures that will be made public out of the world's largest economy at the same time are retail control and weekly jobless claims data, as well as May's numbers on import and export prices. Lastly, US business inventories for April are slated for release at 1400 GMT.

On the trade front, it appears that US officials – President Trump and his top trade advisors – are debating whether they should push forward with $50 billion of tariffs on Chinese imported goods. Such an outcome is likely to lead to escalating tensions, consequently weighing on sentiment and boosting safe-haven perceived assets to the detriment of riskier ones.

Following this week's US-North Korea summit and after meeting his Japanese and South Korean counterparts, US Secretary of State Mike Pompeo will today be heading to Beijing to discuss bilateral as well as broader international issues.

Technical Analysis: EURGBP looks moderately bullish in the short-term

EURGBP is trading roughly 20 pips below last week's five-week high of 0.8837. The RSI continues rising having entered bullish territory, though it is only moderately positively-sloped at the moment. This points to the existence of bullish momentum, albeit only moderately so.

A hawkish ECB is anticipated to boost the pair. Resistance to gains could come around the 61.8% Fibonacci retracement level of the March 7 to April 17 downleg at 0.8834; last week's peak at 0.8837, as well as a three-month high of 0.8841 from early May are also part of the area around this level. An upside break would turn the attention to the 76.4% Fibonacci mark at 0.8885.

On the other hand, a dovish message by the ECB is likely to push EURGBP lower. Support could come around the 50% Fibonacci at 0.8793, including the 0.88 handle and the current level of the 100-day moving average at 0.8788. The region around the 38.2% Fibonacci mark at 0.8752 that also encapsulates the 50-day MA at 0.8756 would be eyed next in case of steeper losses.

UK retail sales are also expected to move the pair.

Daily Pivots: (S1) 147.24; (P) 147.58; (R1) 147.94; More...

Intraday bias in GBP/JPY remains neutral at this point. On the upside, above 148.10 will resume the rebound from 143.18 and target 149.99, and then 153.84 resistance. However, break of 145.82 minor support will argue that the rebound from 143.18 is completed and bring retest of this low.

In the bigger picture, no change in the view that decline from 156.59 is a corrective move. In case of another fall, strong support should be seen above 139.29 cluster support (50% retracement of 122.36 to 156.59 at 139.47) to contain downside and bring rebound. Meanwhile, break of 153.84 should confirm that the correction is completed and target 156.59 and above to resume the medium term up trend.

Daily Pivots: (S1) 129.70; (P) 130.02; (R1) 130.46; More....

Despite breaching 130.26 to 130.33, there is no follow through buying in EUR/JPY. Upside momentum also stays weak as seen in 4 hour MACD. Intraday bias remains neutral first. On the upside, firm break of 130.26 will resume the rebound form 124.61 and target 133.47 key near term resistance next. On the downside, however, break of 127.78 minor support will indicate completion of the rebound from 124.61. Intraday bias will be turned back to the downside for 124.61 first.

In the bigger picture, despite rebounding strongly ahead of 124.08 resistance turned support, there was no clear follow through buying. Note again that there is bearish divergence in daily MACD. Firm break of 124.08 will confirm trend reversal. That is, whole rise from 109.03 (2016 low) has completed at 137.49 already. In that case, deeper fall should be seen back to 61.8% retracement of 109.03 to 137.49 at 119.90 and below. Nonetheless, decisive break of 133.47 key resistance will likely extend the rise from 109.03 through 137.49 high.

The British pound has recovered upside momentum against the US dollar, but is still struggling to make solid gains above the key 1.3420 level in early Thursday trading. The GBPUSD pair currently trades around the 1.3388 level, after finding support from the 1.3307 level on Wednesday. Sterling traders now look to the release of key Retail Sales figures from the United Kingdom economy.

The GBPUSD pair is only bullish while trading above the 1.3420 level, key technical resistance is now located at the 1.3450 and 1.3471 levels.

If the GBPUSD pair fails to move above 1.3420 level, sellers may test back towards the 1.3341 and 1.3306 support levels.

The euro has moved towards the 1.1800 level against the US dollar, hitting 1.1804, as the greenback moves lower following the Federal Reserve's decision to raise US interest rates as expected. The EURUSD pair briefly fell to a fresh monthly trading-low, hitting 1.1724, but dip-buyers soon reversed price higher. Traders now await the ECB Monetary Policy Meeting, with EURUSD bulls looking for further gains above the 1.1800 level.

The EURUSD pair is intraday bullish while trading above the 1.1800 level. Key resistance is now located at the 1.1839 and 1.1875 levels.

If the EURUSD pair moves below the 1.1750 level, sellers will likely test towards the 1.1726 and 1.1700 support levels.

A combination of economic data and monetary policy will drive headlines on Thursday, with the European Central Bank (ECB) scheduled to deliver a pivotal rate announcement.

Action begins at 06:00 GMT when the German government releases final CPI numbers for May. Germany's harmonized index of consumer prices (HICP) is forecast to rise 2.2% annually.

The UK government will report on retail sales at 08:30 GMT. Receipts at retail stores likely rose 0.5% month-on-month and 2.4% annually.

The ECB will deliver its policy verdict at 11:45 GMT. While no change in policy is expected, ECB officials could outline their course of action for the remainder of the year. The ECB will likely do away with its quantitative easing program this year by tapering bond purchases beginning in July.

Shifting gears to North America, the US Department of Commerce will report on retail sales at 12:30 GMT. Sales are projected to rise 0.4% month-on-month following a gain of 0.3% the month before.

Separately, the Labor Department is also scheduled to report on jobless claims at 12:30 GMT. The number of Americans filing for first-time unemployment benefits is expected to rise slightly to 224,000 for the week ending 8 June.

Earlier in the day, the Chinese government reported a bigger than expected slowdown in retail sales, industrial production and fixed-asset investment for the months of April and May. The retail sales slowdown was especially noticeable, as receipts grew only 8.5% annually for May compared with 9.4% the previous month.

AUD/USD

The Australian dollar fell back below 0.7600 on Wednesday, with prices deteriorating well into Thursday's Asian session. AUD/USD was down 0.3% at 0.7556 in overnight trade. The pair is now testing the 0.7552 support. On the opposite side of the spectrum, the Wednesday high of 0.7608 offers the first major resistance for the pair.

EUR/USD

Europe's common currency rebounded sharply on Wednesday as the dollar pared gains following the Federal Reserve's policy decision. EUR/USD briefly fell to a low of 1.1748 before recovering closer to 1.1800. At the time of writing, the pair was trading around 1.1793, where it was little changed. Immediate resistance is likely to be met at 1.1810, the high from Wednesday. On the flipside, immediate support is located at 1.1765.

GBP/USD

Cable traded through volatility on Wednesday as traders reacted to the Fed. The pair reached a low of 1.3319 before rebounding back above 1.3380. GBP/USD opened the Asian session around those levels and is currently unchanged. The pound bulls are eyeing the 1.3400 resistance level for confirmation of a breakout. Above that, the 200-period simple moving average of 1.3590 offers the next resistance barrier.