FX Commentary – U.S. Dollar Held Gains Ahead of FOMC

Market Talk
– The U.S. dollar slipped from near a one-week peak versus major peers on Wednesday, with traders on tenterhooks before a looming Federal Reserve rate decision that should also give clues on the future policy path.

– Data on Tuesday showed U.S. job openings unexpectedly rose in September, highlighting a resilient labour market and that rapid interest rate hikes have yet to bite hard in the real economy, dimming hopes that the Fed would ease on its aggressive rate hike policy to tame inflation.

– The Japanese currency jumped suddenly by about half a yen to 147.4 per dollar, and then extended those gains as far as 147.165 before pulling back with traders on alert for possible intervention around the Fed meeting.

– The Euro and the British pound were both little changed at 0.9883 and 1.1506 respectively. The risk-sensitive Australian and New Zealand dollars also rose strongly, buoyed by a rally in Chinese equity markets.

– Gold prices rose on Wednesday to $1650.65 an ounce  on a softer dollar, while cautious investors awaited a key U.S. Federal Reserve policy statement that could provide cues on its pace of interest rate hike.


Chart Focus EUR/JPY

Key Points

1. Sell EUR/JPY recommendation.

2. Sell EUR/JPY at 145.65. Stop at 145.90 and profit target at 144.60

3. War in Ukraine and a possible recession in Europe are both likely to weigh on the Euro.

4. A potential Double Top chart pattern and bearish MACD are both hinting at a bearish price trend.

Fundamental Comments

1. A possible recession in Europe is likely weighed on the Euro.

2. War in Ukraine is likely to weigh on the Euro zone economy.

Technical Comments

1. A potential Double Top chart pattern is hinting at a bearish price trend.

2. A bearish MACD is also hinting at a bearish price trend.



Key Levels

Support145.45145.00144.55
Resistance145.95146.40146.95









Technical Overview

USD/JPY – Price was unable to hold above the 20EMA line and decline to a low of 147.98 overnight. Today price has moved in a tight range in view of FOMC later in the global day. Stochastic is still declining, hinting at a price decline. MACD remains bullish and is hinting at a bullish price trend. 20EMA is bearish. Price is likely to stay in a tight range for today ahead of the FOMC while trend is likely to be determined by the FOMC decision.

Support147.25146.95146.60
Resistance148.40148.85149.45

EUR/USD – Price declined to a low of 0.9852 which was also the Fibonacci 62% correction point of the rally from 0.9704 to the high at 1.0093. As long as price stays above this Fibonacci support, price is likely to move up to 1.0090 again in the next few days. However, a decline below the Fibonacci support is likely to send price lower to 0.9705. Stochastic is near to the oversold zone and both MACD and 20EMA are bearish.

Support0.98500.98050.9765
Resistance0.98950.99400.9995

GBP/USD – The price correction off the high of 1.1645 halted at the previous support level at 1.1430. Stochastic is near to the oversold zone while MACD is above to have a bullish crossover near to the zero line. 20EMA is neutral at the moment. If price can stay above 1.1430, we are likely to see another rally to 1.1645. If below the support at 1.1430, we are likely to see a pullback to 1.1255 in the next few days.

Support1.14751.14301.1380
Resistance1.15251.15801.1625

XAU/USD – We had a sell recommendation yesterday at $1644.85 but we were wrong on this call. Price reached a high of $1656.50 and our stop at $1652.95 was triggered. Stochastic continues to rise towards the overbought zone, hinting at a bullish price trend. 20EMA remains bullish and is hinting at a bullish price trend but MACD is neutral at the moment, with each of its two lines in different zone of the zero line.

Support1645.351630.701616.95
Resistance1656.501666.501674.80

NZD/USD – The decline off the 0.5901 peak managed to hold above the 20EMA line and has been slowly but surely moving higher. If price stays above the 20EMA line, we are likely to see another test of the previous peak at 0.5901. However a decline below the 20EMA line is likely to send price lower to 0.5720. MACD and 20EMA remain bullish and are hinting at a bullish price trend but stochastic is neutral.

Support0.58350.57750.5745
Resistance0.58750.59050.5955

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