The long awaited FOMC statement was released to the public yesterday, and within a few seconds when market participants realised that there was no hike this July, the USD weakened aggressively across the board. The statement was neutral and quite similar to the report in June. This scenario was expected and discussed with detail in yesterday’s report. After the initial shock, normality was regained. USD strength became reimbursed once investors digested the statement with the understanding that things were simply moving closer to the rate hike in September.
While the language was neutral, it was more hawkish than the previous statement. Key points were that a further job market improvement was needed in addition to inflation hitting the 2% medium-term target. Data from the US has been on a green streak for a while, even though consumer confidence printed below expectations on Tuesday, the overall sentiment for the USD still remains bullish with more positive data expected throughout the week.
As for today, there will be an influx of release for the USD in the US session. Advanced GBP q/q is predicted at 2.6% compared to the previous of -0.2%. This is a hefty increase but the consistent dollar strength and positive data from the States may be the attributes which should warrant for such an improvement. Another batch of unemployment claims will be released at the same time with a forecast of 268k compared to the previous 255k, I expect the actual to beat expectations.
Already, the USD has started today bullish. Important levels on the EURUSD, Gold and other USD pairs are being tested. The Non-Event FOMC yesterday has truly renewed the USD strength. A consistent release of positive data for the US, in addition to very good NFP releases in the future, should fortify the potential of a rate hike in September.
Since the incline observed on Monday when the EURUSD hit the highs of 1.1129, there has been a steady decline down. The FOMC yesterday aided prices in attaining a daily close below the important 1.100 level. With the EUR acting as the passive counterpart, the USD strength should drive prices back to the 1.0850 support. Technically a trend change can be seen on the daily timeframe. Prices have breached the daily 20 SMA, the next step would be a solid close below the weekly pivot of 1.0934. The events of this week may be seen as preparation for a potential daily shorting opportunity next week.
Intraday – EURUSD is bearish intraday. Since the events of yesterday evening, the pair has been trending smoothly to the downside. With prices trading both below the hourly 20 SMA and daily pivot, first targets for today point to the daily S1 of 1.09350. A positive release this afternoon in regards to data from the US should send prices lower to the daily S2 just below the 1.0900. An hourly close back above 1.100 invalidates this intraday bearish outlook.
GBPUSD trades back within the identified daily range. The support at 1.5600 and resistance at 1.5000 have been very sticky for the past 12 trading days. Prices were able to spike above 1.5600 on the daily but heavily failed to close above. This is still a flat market, as the GBP and USD are both strong as of now. One may simply play the range.
Intraday – This pair looks quite undesirable on the hourly timeframe. Prices have been in a 10 pip range for the past few hours. A breakdown below 1.5590 may offer an intraday shorting opportunity to the daily S1 of 1.5560. The events of this afternoon may loosen the GBPUSD a bit more.
Aussie has been quite passive for a while. In the earlier sessions of today, there was a variety of releases which were below expectations for the AUD. The pair acted almost indifferently. AUDUSD bears are struggling somewhat and the question of overselling does crop up. Technically this is still a bearish market as long as prices can keep below the strong 0.7450 resistance. A breakdown of the current support at 0.7260 should open a path to the weekly S1 of 0.7200.
Intraday – AUDUSD is another undesirable looking pair on the hourly. Plagued with indecisive candlesticks, the best strategy may be to re-access this pair post news release this afternoon.
USDJPY approaches key resistance at 124.50. The renewed USD strength combined with the potential of positive news this afternoon may cause the USDJPY to breakout above this key resistance. Technically this market is still flat on the daily, with leading and lagging indicators suggesting such. Above 124.50 things start to turn bullish once more with targets of 125.85. The highs of June 2015.
Intraday - Bulls have taken the stage since yesterday. There have been higher highs and higher lows. Prices reside above the daily pivot and 20 SMA. A solid hourly close above the daily R1 may open a path to the daily R2 of 124.40. An hourly close back below 123.85 invalidates this intraday bearish view.
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