Daily Forex Market Preview, 21/09/2017
The Fed’s meeting yesterday was in line with expectations as the central bank announced its balance sheet normalization which starts in October. The Fed will be unwinding $10 billion per month in a mix of both Treasuries and MBS’s. The central bank also signaled that there could be one more rate hike by the end of this year.
Inflation expectations were cut back from policy makers for 2017 and 2018, and there was one less rate hike projected for next year. The Fed’s meeting saw the US dollar posting strong gains with the markets now re-pricing the possibility of another rate hike this year.
Later in the evening, New Zealand’s quarterly GDP data showed that the economy expanded at a pace of 0.8% as expected. Q1 GDP data was also revised higher to show a 0.6% increase.
Looking ahead, the BoJ’s monetary policy and press conference are coming up today. The central bank is expected to keep policy unchanged at today’s meeting. The ECB President, Mario Draghi will be speaking later in the afternoon which could pose some risks for the euro currency.
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EURUSD intraday analysis
EURUSD (1.1885): The EURUSD fell sharply yesterday to close at a 4-day low. Price action is expected to continue the momentum, but the declines could be stalled near 1.1820. On the 4-hour chart, the head and shoulders pattern failed with price reversing strongly. EURUSD is seen currently supported at 1.1882 along with the rising trend line. This could offer some near-term support, but unless the bullish momentum sends the common currency to post fresh highs, we can expect this sideways pattern to continue.
GBPUSD intraday analysis
GBPUSD (1.3491): The British pound closed with a doji yesterday as price continued to consolidate above the 1.3500 handle. The bullish flag pattern remains in play as GBPUSD is seen currently testing the support level at 1.3483. As long as this support holds, the bias is to the upside although resistance at 1.3590 will need to be breached in order to set the stage for further gains. In the near term, GBPUSD could be seen consolidating within the resistance and support levels. A breakout from could either validate or invalidate the bullish flag pattern.
XAUUSD intraday analysis
XAUUSD (1299.75): Gold prices extended the declines following a slight bounce. Failure to retest the resistance level at 1324 – 1320 saw gold prices posting sharp declines to slide to 1300 support level. This potentially marks the downside target in gold. There is scope for prices to now post a reversal off this support which could see a retest back to the initial resistance level followed by further gains on an upside breakout. To the downside, below 1300, gold prices could be seen testing the 1290 handle where the next support comes in.
