USD revs ahead of FOMC

Global Market: As ambiguity grows within the financial markets due to the lack of clarity offered by the trading sessions, the USD has been on the receiving end and as such has been exposed to further weakness. A looming FOMC statement release, in addition to an uneasy atmosphere felt by market participants has punished the value of the Dollar in September.

Despite the market jitters which rippled through the equities arena in the early part of Tuesday’s trading sessions, American equities closed in green territory with the Dow Jones closing up in triple digits. Asian and European equities followed the same pattern as the countdown draws closer.

The developments in China still remain the major theme, but on Thursday the limelight will be on the interest rate decision from the Fed and if there is a possibility that rates will be hiked.  The United States has provided a stable supply of positive economic releases in addition to a decline in total unemployment to 5.1%, and this offers a case for a hike. On the other hand, emerging markets which have felt the brunt of the global developments may be punished further by the rate hike which may open them to further weakness.

Due to the impending FOMC statement on Thursday, the USD has entered a state of heightened sensitivity. Retail sales on Tuesday missed expectations and printed at 0.2% compared to the predicted 0.3%, on normal occasions this should have exposed the USD to weakness but market participants observed the USD gain some bullish momentum. The Dollar index as a result perched at the 95.67 level in Tuesday’s session before declining back to the 95.46 mark as of writing.

The focus on Wednesday for the United States will be the CPI report which will be released in the New York session. Expectations for the CPI remain at 0.0%; this is realistic simply because of the resumed selling of commodities which has likely weighed on the US inflation prospects. If CPI prints above the 0.0% prediction then this may result in USD strength, which may inspire an accelerated bullish momentum for the USD due its state of heightened sensitivity.

EURUSD

With the FOMC statement on Thursday, the EURUSD remains in a sensitive state. Technically the pair is consolidating within a wide range. The MACD points to the upside, but prices are marginally above the daily 20 SMA. A first line of resistance can be found at 1.1350 and support at 1.1150. A breakout/down seems likely post FOMC statement on Thursday.

USDCAD

The USDCAD has been technically bullish on the daily timeframe for an extended period of time. Weak oil prices have put pressure on the CAD, enforcing bullish momentum on the USDCAD. The MACD trades to the upside, but prices are marginally above the daily 20 SMA. Support can be found at 1.3150 and resistance at 1.3350. Post FOMC on Thursday may result in a breakout or breakdown.

AUDUSD

A strong rebound in the price of Iron ore has inspired some bullish momentum with the AUD. The AUDUSD still remains technically bearish with this upsurge seen as a correction. As long as prices can keep below the 0.7200 level, the AUDUSD may be able to trade back down to the 0.6900 support. A move back above 0.7200 invalidates this daily bearish outlook.

USDJPY

The USDJPY is technically bearish on the daily timeframe. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. The pair is in a phase of consolidation and may resume post FOMC statement on Thursday. Resistance can be seen at 121.70 and support can be found at 118.50. As long as prices can keep below the 121.70 resistance, this remains bearish on the daily timeframe.

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