Trading Outlook Ahead of FOMC: US Dollar, Cross-rates, Gold Price & More

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Today, we took a look at markets ahead of the FOMC announcement. Expectations are for another 25-bps hike, where the ‘surprise’ element could come into play is in regards to future signaling for the remainder of the year. For live coverage of today’s FOMC announcement, sign up here.

We started off by looking at the US Dollar Index (DXY), which is still stuck in a pretty solid downtrend, but may have a correction in it with a higher low attempting to carve itself out. EURUSD, ~57% of the DXY, looks like it may want to dip a little here, but trend-line support from April and the mid-111s offer good support. A hold will be key for the near-term bullish outlook to remain. This morning, GBPUSD was rejected on a test of old support turned resistance near 12800. As long as it stays beneath the bias is for a move below 12600 in the near-term. USDJPY is a bit of a mess but at a confluence of technical events which makes the situation a bit explosion. We’ll wait on this one.

Cross-rates discussed were EURAUD, EURNZD, GBPAUD, GBPNZD and Yen crosses.

After gold’s massive rejection on an attempt to put in a strong weekly close above the 2011 trend-line, it is now holding the 1260s-support area on the daily. If gold breaks solidly below 1260 then look for follow through on last week’s reversal. If 1260 can maintain and gold can get a bid higher and negate last week’s bearish reversal, a much broader move higher is anticipated.

Crude oil is failing to muster much of a bounce after dropping below the 47 level. Looking for continued follow-through down beneath 44.

The DAX is carving out a bullish configuration and looks headed towards 13k, while the CAC 40 is working on breaking out of a descending wedge. The FTSE 100 is caught between strong top and bottom-side levels, need to wait for a resolution. The S&P 500 is hanging tough after Friday’s wild day, looking for a new high soon.

For full technical considerations, please see the video above…

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—Written by Paul Robinson, Market Analyst

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