InvestMacro

The Analytical Overview of the Main Currency Pairs on 2022.09.22

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 0.9965
Prev Close: 0.9836
% chg. over the last day: -1.31 %

The Federal Reserve unanimously raised its target range for Fed funds by 75 basis points and raised its rate hike forecasts. The Fed Funds rate for the end of 2022 is now expected to be 4.4%, indicating a high probability of another 75bp increase in November and 50bp in December. Monetary policy is expected to tighten further in 2023 and the year-end rate is expected to be 4.6% before falling to 3.9% in 2024 and 2.9% in 2025, with the long-term forecast remaining at 2.5%. The US Federal Reserve cut annualized GDP growth in Q4 2022 to 0.2% from 1.7% and in 2023 to 1.2% from 1.7%. And while the markets expected the 0.75% increase, this further aggressive attitude of the US Fed was a surprise. As the dollar index rose, the euro fell to a 20-year low.

Trading recommendations

Support levels: 0.9800
Resistance levels: 0.9949, 1.0048, 1.0111, 1.0162, 1.0230

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame has changed to bearish. The price is trading below the moving averages, and sellers’ pressure is still high. The MACD indicator is deeply negative, but divergence can be seen on several timeframes. It is best to look for sell trades from the resistance level of 0.9949. Buy trades can be considered from the round level of 0.9800, but only with confirmation.

Alternative scenario: if the price breaks out through the resistance level of 1.0111 and fixes above it, the uptrend will likely resume.

News feed for 2022.09.22:

– US Initial Jobless Claims (w/w) at 15:30 (GMT+3).

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.1368
Prev Close: 1.1262
% chg. over the last day: -0.94 %

The Bank of England will hold its monetary policy meeting today. Analysts forecast that the central bank will raise the interest rate by 0.5%. A 0.75% hike is also being considered, but with the new UK government looking to cap household energy bills for the next two years, such a move is considered unlikely. At the moment, the British pound is under pressure from a rise in the dollar index, especially after the Fed’s aggressive plans to further tighten monetary policy by raising interest rates until the second half of 2023. As the dollar index rose, the pound sterling fell to a 37-year low.

Trading recommendations

Support levels: 1.1200
Resistance levels: 1.1363, 1.1449, 1.1626, 1.1693, 1.1816, 1.1901, 1.1994

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. At the moment, the price is trading below the moving averages, and sellers’ pressure remains. The MACD indicator is in the negative zone, but there is a divergence, and it is getting stronger. Sell trades are better to look for on the intraday time frames, and the nearest resistance level is 1.1363. Buy trades can be considered from the round level of 1.1200, but only with confirmation.

Alternative scenario: if the price breaks out of the 1.1626 resistance level and fixes above it, the uptrend will likely resume.

News feed for 2022.09.22:

– UK BoE Interest Rate Decision at 14:00 (GMT+3);
– UK MPC Meeting Minutes at 14:00 (GMT+3).

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 143.71
Prev Close: 144.06
% chg. over the last day: +0.24 %

The Japanese yen showed surprising resilience to the dollar index gains yesterday, indicating that traders see a threat of intervention by the Bank of Japan to strengthen the Japanese yen. The Bank of Japan’s zero interest rate stance, even as inflation in Japan has reached its highest annual rate in nearly eight years, has traders betting that the central bank will eventually have to abandon an extensive bond-buying project that has kept 10-year bond yields at zero. At its meeting today, the central bank kept all key elements of its policy unchanged.

Trading recommendations

Support levels: 142.10, 141.00, 139.61, 138.78, 137.65, 136.80, 135.20
Resistance levels: 145.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The MACD indicator is in the positive zone, and there is slight pressure from buyers. Under such market conditions, buy trades can be searched for on intraday time frames but with confirmation. Selling can be sought from the resistance level of 145.00, but only with additional confirmation, as fundamentally, USD/JPY quotes are inclined to grow.

Alternative scenario: If the price fixes below 142.10, the downtrend will likely resume.

News feed for 2022.09.22:

– Japan BoJ Outlook Report (Tentative);
– Japan BoJ Interest Rate Decision (Tentative);
– Japan BoJ Press Conference at 09:30 (GMT+3).

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.3365
Prev Close: 1.3366
% chg. over the last day: +0.76 %

The Canadian dollar has reached a two-year low. The Canadian currency is declining for two main reasons. The first is that the dollar index reached a 20-year high on the back of aggressive actions of the US Federal Reserve. The second is that oil is declining due to higher inventories as well as expectations of lower economic activity. When there is a lot of uncertainty about the global outlook, investors tend to look for safe assets such as the US dollar, bonds, and gold.

Trading recommendations

Support levels: 1.3390, 1.3298, 1.3212, 1.3053, 1.2990, 1.2958, 1.2936, 1.2900
Resistance levels: 1.3531, 1.3561

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The MACD indicator has become positive, there is buying pressure, but the divergence is increasing. The price has reached the daily resistance zone. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3390. The best way to sell is to consider the resistance level of 1.3531 or 1.3561, but only after an additional confirmation in the form of a false breakout.

Alternative scenario: if the price breaks down and consolidates below the 1.3212 support level, the downtrend will likely resume.

There is no news feed for today.

By JustForex

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Financial News Forex and Currency News

22 Sep

The US Federal Reserve is not going to stop. The risks of a global crisis are growing

By JustForex

The Federal Reserve raised interest rates and changed its outlook for further rate hikes, indicating a period of higher interest rates. The prospect of higher interest rates over the long term has put pressure on growing sectors of the economy. As the stock market closed on Tuesday, the Dow Jones Index (US30) decreased by 1.70%, and the S&P 500 Index (US500) lost 1.71%. The NASDAQ Technology Index (US100) fell by 1.79% yesterday.

The Fed raised rates by 0.75% and signaled that rates will reach about 4.4% by the end of the year and 4.6% by the end of 2023, well above the 3.8% previously projected. For 2023, inflation is estimated to fall to 3.1% from the previous forecast of 2.7%, and in 2024, inflation expectations will remain unchanged at 2.3%. Fed members estimate that the economy will grow by 0.2% in 2022, sharply lower than the previous forecast of 1.7%. Growth forecasts have also been revised downward for 2023 and 2024. The Fed also predicts that a recession might be avoided, despite the need to accelerate rate hikes. But economists at Jefferies do not believe this and believe the Fed is incapable of effecting such a delicate planting of the economy. The pace of tightening has increased the risk that the Fed will slow growth too much, pushing the economy into a deep recession. The Fed’s aggressive push to bring inflation down to 2% would take years and cost higher unemployment and slower growth, according to policymakers who have questioned the prospects of a so-called “soft landing.” Bond markets quickly assessed the growing risk of recession as the Treasury yield curve flipped further. The yield on the 2-year Treasury bond rose above 50 basis points compared to the yield on the 10-year Treasury bond.

Federal Reserve Chairman Jerome Powell said Wednesday that the US real estate market will likely undergo a “correction.” This year, the Fed’s rate hikes have had the biggest impact on the real estate sector, slowing sales and lowering prices. Housing inflation will remain high for some time.

As for business activity, the geopolitical backdrop, slowing growth in China, the possibility of energy rationing in Europe, a strong dollar, and volatile domestic equity and real estate markets point to clear recession risks worldwide.

Equity markets in Europe were mostly up yesterday. German DAX (DE30) gained 0.76%, French CAC 40 (FR40) added 0.87%, Spanish IBEX 35 (ES35) declined by 0.01%, British FTSE 100 (UK100) closed the day at 0.63%.

Prime Minister Liz Truss’ plans to cut payroll taxes and reverse a planned corporate tax hike risk putting the UK national debt on an unsustainable upward trajectory, the IFS Institute for Financial Studies said Wednesday. Truss’ plans will likely result in a permanent budget deficit of about 3.5% of the Gross Domestic Product once energy subsidies end, well above the pre-recession average of 1.9%. Truss has promised tax cuts of about £30 billion a year. Finance Minister Kwasi Kwarteng will outline the details of the financial plan on Friday.

Finland will prepare a bill to restrict Russian tourists from entering its territory, Foreign Minister Pekka Haavisto said at a news conference in New York.

The European Commission is preparing a new package of sanctions against Russia. On September 23, the EU executive body will initiate a discussion of its proposals with ambassadors of EU countries. Among the proposed measures will be a restriction on Russian oil prices and a ban on imports of Russian diamonds and other luxury items.

The US President Joe Biden’s main talking points at the UN General Assembly:

Russia is shamelessly violating the basic provisions of the UN charter. If countries can pursue imperial ambitions without consequence, it jeopardizes everything the UN stands for.
Putin recklessly threatens nuclear weapons.
No one has threatened Russia, and no one but Russia has sought conflict.
The United States does not seek conflict with China.

Oil prices fell after the Fed raised interest rates to curb inflation because it could also reduce economic activity. A widespread increase in US oil, gasoline, and distillate inventories announced by the Energy Information Administration last week sent oil prices near their January lows.

Increased geopolitical risks made not only the dollar a safe haven but also the precious metals gold and silver, which yesterday showed resilience to the rising dollar. Investors are returning to safe haven assets because there are almost no alternatives now.

Asian markets were trading lower yesterday. Japan’s Nikkei 225 (JP225) was 1.36% lower, Hong Kong’s Hang Seng (HK50) decreased by 1.79% on Wednesday, and Australia’s S&P/ASX 200 (AU200) was 1.56% lower on the day.

Asian fund managers are betting that the inevitable fall of the Japanese yen will soon stop, and some are even getting ready for the possible fall of the Japanese government bonds. Analysts believe Japanese politicians will ask Bank of Japan Governor Haruhiko Kuroda to cancel the 0.25% ceiling on 10-year JGBs and try to steer the economy away from trouble. But for now, this is just a talk. At its meeting today, the Japan Central Bank kept all key elements of its policy unchanged.

S&P 500 (F) (US500) 3,789.93 −66.00 (−1.71%)

Dow Jones (US30) 30,183.78 −522.45 (−1.70%)

DAX (DE40) 12,767.15 +96.32 (+0.76%)

FTSE 100 (UK100) 7,237.64 +44.98 (+0.63%)

USD Index 111.32 +1.10 (+1.00%)

Important events for today:

– Japan BoJ Outlook Report (Tentative);
– Japan BoJ Interest Rate Decision (Tentative);
– Japan BoJ Press Conference at 09:30 (GMT+3);
– Switzerland SNB Monetary Policy Statement at 10:30 (GMT+3);
– Switzerland SNB Interest Rate Decision at 10:30 (GMT+3);
– Norwegian Interest Rate Decision at 11:30 (GMT+3);
– UK BoE Interest Rate Decision at 14:00 (GMT+3);
– UK MPC Meeting Minutes at 14:00 (GMT+3);
– US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
– US Natural Gas Storage (w/w) at 17:30 (GMT+3).

By JustForex

Economics & Fundamentals Financial News

22 Sep

Why FX markets react to central banks?

By ForexTime

This week has been jam-packed with major central bank decisions that have triggered wild swings across FX markets.

Here’s a quick catch up:

US Federal Reserve: hiked by 75 basis points
Bank of Japan: left benchmark rate unchanged
Swiss National Bank: hiked by 75 basis points
Central Bank of Norway: hiked by 50 basis points
Bank of England: hiked by 50 basis points

For an example as to how much a central bank can influence FX markets, consider how the equally-weighted USD Index (which measures the dollar’s moves against six other G10 currencies) has punched its way to a fresh two-year high, trading at levels not seen since the onset of the pandemic.

Such a spike in the US dollar came after the US central bank, also the world’s most influential central bank, informed markets that it has to push US interest rates higher than expected in order to combat stubbornly-high inflation.

With so much action going on across FX markets, here’s a timely reminder of the basics surrounding how central banks impact FX markets.

First, let’s begin with …

What is a central bank?

A central bank is an institution that manages a country’s currency and money supply.

It also helps the economy achieve certain goals, such as keeping unemployment stable and low while ensuring price stability (keeping inflation under control).

What’s the main problem for central banks right now?

Currently, the number one problem facing most central banks around the world: red-hot inflation!

That is to say, the central bank’s is trying hard to make sure that the prices that consumers are paying don’t rise too much too fast.

Of course, the central bank wants to protect the public and make sure consumers can continue spending money to help grow the economy.

Otherwise:

When things get too expensive, consumers may not be able to afford as much goods and services, which may lead to lowered spending.
When overall spending sees a big drop in an economy, that would negatively affect the income that businesses and producers can get.
Less income for companies may translate into cost-cutting measures (e.g. job cuts) in order for the business to try and survive.

In short, inflation that’s out-of-control is bad news for the economy.

How are central banks trying to control inflation?

The main way that most central banks try and subdued red-hot inflation is by raising interest rates.

Here’s how it works:

Higher interest rates = lower demand / lower money supply = slower inflation

However, there’s a dark side to interest rate hikes as well.

If a central bank raises its benchmark rate(s) too high, too fast, that may destroy demand levels (drastically lowered spending) in an economy to the point that there’s a recession!

Hence it’s a tricky balancing act that central banks face right now.

They have to raise interest rates high enough to subdue inflation, but not do it too much so as to incur too much pain for the economy (e.g. too many jobs lost).

So how does all this impact currency markets?

Here are three key ways:

Economic performance

Markets reward the currency of the economy that can better withstand these higher interest rates.

For example, the US dollar has surged to its highest levels against the British Pound since 1985, even though both the US Federal Reserve and the Bank of England have been raising interest rates.

Because markets believe that the US economy is better withstanding this ongoing rate hikes, better than the UK economy that’s facing its worst cost-of-living crisis in a generation, there has been more demand for the US dollar relative to the British Pound.

Hence, no surprise that GBPUSD has now reached its lowest levels since 1985.

Yields

When a central bank raises its interest rates, investors also sell off its government bonds.

When the prices of these bonds fall, their yields rise.

NOTE: Yields are a measure of how much an investor can earn from a particular asset.

Hence, the country whose bonds offer a higher yield then attracts more investors, who then demand more of that country’s currency in order to purchase its assets.

In fewer words, generally speaking, higher yields = stronger currency.

This is especially evident in USDJPY which has soared to its highest levels since 1998 earlier, almost touching the 146.0 mark before pulling back today.

When you consider the following yields on offer:

US 10-year Treasuries: 3.53%
Japanese 10-year government bonds: 0.228%

Given this massive gap between US and Japanese yields, no surprise that investors have been flocking to the US dollar and less so the Japanese Yen.

Currency intervention

A currency that weakens drastically can also have negative consequences.

For one, it makes imports more expensive, which means consumers in that country have to fork out more money to buy imported goods and services.

Again, when prices go up, demand/spending goes down.

Hence, a central bank may intervene to support its currency, like the Bank of Japan announced today (Thursday, sept 22nd).

And sometimes, markets are ready to react to the mere though of currency intervention, and not the actual “intervening” in and of itself, as was the case with the Swiss National Bank today.

With all that said, hopefully it is now clear what central bankers say and do often do have a massive impact on FX markets, as we’ve seen all of this week.

And there are more key decisions and announcements to be made in the months to come, seeing as this global battle against inflation is far from over.

So make sure you keep watching this space for the latest developments surrounding upcoming central bank decisions.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Forex and Currency News Opinions

21 Sep

Fed keeps focus on US economy as the world tilts toward a recession that it may be contributing to

By D. Brian Blank, Mississippi State University

The U.S. Federal Reserve holds inordinate sway over the world’s economies – yet it acts, in some ways, like they don’t really matter.

Its power is primarily because of the dominance of the U.S. dollar, which soared in recent months as the Fed’s aggressive interest rate hikes made the greenback more attractive to investors. But this has a downside for other countries because it is fueling inflation, raising the cost of borrowing and increasing the risk of a global recession.

If you only paid attention to the words of Fed Chair Jerome Powell, however, you probably would have no idea this is happening. He hasn’t said a peep in his public speeches about the significant risks to the global economy as central banks jack up interest rates to tame inflation – including the Fed’s 0.75 percentage point increase on Sept. 21, 2022.

This may seem a bit odd that the Fed would appear to be so blasé about the global economy that it arguably leads. Yet as a finance scholar, I believe it makes perfect sense – though there are risks.

The Fed’s domestic focus

The Federal Reserve is mandated to focus on the U.S. economy, and it takes this job very seriously.

While central banks are aware of all global economic data, they focus on their own economies, helping them do what is best for their own nations. In the U.S., that means the Fed is focused on improving the American economy through
stable prices and full employment.

As a result, when the U.S. economy is slowing too quickly and people are losing jobs, such as early in the pandemic, the Fed lowers interest rates – no matter the impact on other countries. Similarly, when the economy is growing but consumer prices are rising too fast, the central bank raises interest rates.

And its global impact

Yet it’s unavoidable that the Fed’s policies will influence economies, companies and citizens in virtually every country in the world.

While all central banks influence the rest of the world, the Fed has a much larger impact because of the size of the U.S. economy – it remains by far the largest in absolute terms – and the prominence of the U.S. dollar in international markets and trade.

Approximately half of the world’s international debt is denominated in dollars, which means countries need to pay interest and principle on what they borrow in greenbacks. The dollar has soared almost 15% this year relative to a basket of foreign currencies, largely as a result of the Fed interest rate hikes that began in March. That means it’s, on average, 15% more expensive to finance those dollar-denominated debts – and for some countries, it could be a lot more.

Moreover, about 60% of all global foreign exchange reserves – that’s the money central banks hold to protect the value of their own currencies – are in dollars. And since most major commodities like oil and gold are priced in dollars, a stronger dollar makes everything cost a lot more for businesses and consumers in every country.

Finally, when U.S. interest rates are high relative to those in other countries, more foreign investment flocks to the U.S. to get more bang for their buck. Since there’s only so much money to go around, this drains investment from other economies, especially emerging markets. And it means they have to raise interest rates to keep foreign direct investment flowing into their countries, which can hurt their local economies.

Risks in a global world

Unfortunately, focusing solely on the domestic economy has its own risks.

It may sound cliche, but we do live in a global, interconnected world – something demonstrated powerfully by the COVID-19 pandemic and the supply chain issues that repeatedly rippled across the world. American businesses depend on other countries for supplies, workers and consumers.
That means even if the Fed manages a proverbial soft landing and is able to reduce inflation without causing a recession, a global downturn may still ultimately reach American shores. This could threaten much of the Fed’s success if the global slowdown results in international instability or food insecurity.

So while I believe the Fed is correct to keep its focus on the U.S. economy and lift rates as much as it deems necessary, I’ll be looking closely at the central bank’s economic projections. If the data shows the U.S. economy’s inflation problems diminishing, the Fed may be able to begin to think a bit less about what’s happening in its own backyard and more about the impact of its policies on the rest of the world.

About the Author:

D. Brian Blank, Assistant Professor of Finance, Mississippi State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Economics & Fundamentals Opinions

21 Sep

Mid-Week Technical Outlook: G10 Currencies

By ForexTime

A wave of risk aversion whacked financial markets on Wednesday after President Vladimir Putin declared a partial mobilization over Ukraine and accused the West of ‘nuclear blackmail’.

This negative development hit stocks as investors rushed to safe-haven destinations like the dollar, gold, and government bonds. With tensions likely to escalate between Russia and Ukraine following the latest news, risk-off may remain the name of the game ahead of the Federal Reserve rate decision this evening.

We have a couple of potential trading opportunities on our radar that could be triggered by not only the Fed but BoE and key economic reports this week. Our focus will fall on G10 currencies and our tool of choice will be none other than technical analysis.

DXY gearing for a breakout?

Heightened geopolitical tensions injected dollar bulls with fresh inspiration this morning. A hawkish Federal Reserve could feed the beast, pushing the Dollar Index (DXY) beyond 110.78 before the end of today! Such a development could encourage a further incline towards 111.00 and 112.50, respectively. A move back below 109.14 may result in a selloff back to 107.75.

EURUSD slams into 0.9900

Bears are knocking on 0.9900’s door and may force their way through this support if the dollar continues to appreciate. The EURUSD is under a lot of pressure with bears enjoying the ride downhill. A solid breakdown below 0.9900 could encourage a selloff towards 0.9700.

GBPUSD builds downside momentum

The BoE decision ON Thursday will heavily influence the GBPUSD near-term outlook. A hawkish central bank that moves ahead with a jumbo rate hike could throw pound bulls a lifeline. However, upside gains are likely to be capped by growth fears. Prices have the potential to sink lower if a daily close below 1.1350 is secured.

USDJPY trapped within range

Over the past few days, the USDJPY has been trapped within a 300-pip range with support at 142.00 and resistance at 145.00. The trend is bullish with prices trading above the 50, 100, and 200 SMA. A solid breakout above 145.00 could inspire a move towards 146.00 and higher. If prices sink back towards 142.00, we can see the USDJPY challenge at 139.50.

AUDUSD breaks below 0.6700

A stronger dollar continues to drag the AUDUSD lower. Should prices descend below 0.6650, this could trigger a selloff to 0.6520. For bulls to jump back in, prices need to trade back above 0.6700 with 0.6850 acting as a key level of interest.

Bonus: S&P 500

Appetite for riskier assets has been hit by mounting geopolitical tensions. This may translate to more losses on the S&P 500 which remains bearish on the daily charts. A strong move below 3810 could result in a selloff towards 3700 and 3636. If bulls can push prices back above 3905, expect a potential incline towards 3945 and the 100-day SMA at 4000.

Bonus: Gold

How gold performs this week will be heavily influenced by the Fed meeting on Wednesday evening. As highlighted earlier, the precious metal remains under pressure and could be in store for more punishment if the dollar and Treasury yields jump. A move below $1655 could swing open the floodgates, dragging prices towards $1600 and lower.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Forex and Currency News Opinions

21 Sep

Ichimoku Cloud Analysis 21.09.2022 (GBPUSD, USDJPY, NZDUSD)

Article By RoboForex.com

GBPUSD, “Great Britain Pound vs US Dollar”

GBPUSD is rebounding from the resistance level. The instrument is currently moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test Kijun-Sen at 1.1425 and then resume moving downwards to reach 1.1125. Another signal in favour of a further downtrend will be a rebound from the descending channel’s upside border. However, the bearish scenario may no longer be valid if the price breaks the cloud’s upside border and fixes above 1.1565. In this case, the pair may continue growing towards 1.1655.

USDJPY, “US Dollar vs Japanese Yen”

USDJPY is still testing the bullish channel’s downside border. The instrument is currently moving above Ichimoku Cloud, thus indicating an ascending tendency. The markets could indicate that the price may test the cloud’s upside border at 143.35 and then resume moving upwards to reach 147.35. Another signal in favour of a further uptrend will be a rebound from the downside border of the Triangle pattern. However, the bullish scenario may no longer be valid if the price breaks the cloud’s downside border and fixes below 141.45. In this case, the pair may continue falling towards 140.55. To confirm a further uptrend, the price must break the pattern’s upside border and fix above 145.65.

NZDUSD, “New Zealand Dollar vs US Dollar”

NZDUSD is falling within the bearish channel. The instrument is currently moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test Kijun-Sen at 0.5905 and then resume moving downwards to reach 0.5815. Another signal in favour of a further downtrend will be a rebound from the descending channel’s upside border. However, the bearish scenario may no longer be valid if the price breaks the cloud’s upside border and fixes above 0.5945. In this case, the pair may continue growing towards 0.6035.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Financial News Forex and Currency News

21 Sep

EURUSD: expecting the Fed’s decision. Overview for 21.09.2022

Article By RoboForex.com

EURUSD is falling pressured by the “greenback”; market players are focused on the Fed meeting.

The major currency pair is falling on Wednesday. The current quote for the instrument is 0.9927.

All investors are focused on the Fed’s meeting to be over later in the evening, where the regulator is expected to announce its rate decision. The rate will be raised, the question is by how much.

The key scenario implies a 75-point rate hike – 85% of investors think this way. Other 15% believes in a more positive variant that offers a 100-point increase.

If the Fed raises the rate by 1%, the “greenback” will get a signal for an immediate bullish rally. However, if it happens, investors will be caught up in a dilemma – will the other global central banks be able to catch up with the Fed or will be Fed itself be able to keep its own pace?

If the Fed decides to stick to a conservative approach and raises the rate by 50 basis points, the “greenback” will be shocked.

As usual, not only the regulator’s comments will be important – market players will be considering everything. The evening is promising to be volatile.

Article By RoboForex.com

Financial News Forex and Currency News

21 Sep

The Analytical Overview of the Main Currency Pairs on 2022.09.21

By JustForex

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.0020
Prev Close: 0.9967
% chg. over the last day: -0.53 %

In her speech yesterday, ECB head Christine Lagarde said that inflation in the Eurozone has been stronger than previously forecast. The main reasons for that are the pandemic and Russia’s invasion of Ukraine. The ECB will continue to pursue a strategy of monetary policy normalization. Normalization implies stopping net asset purchases and raising rates to a neutral level, i.e., a level that is neither stimulative nor restrictive. Thus, the ECB will continue to raise interest rates over the next few meetings.

Trading recommendations

Support levels: 0.9912
Resistance levels: 1.0148, 1.0111, 1.0162, 1.0230

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. But now, ahead of the Fed meeting, the price is forming a balance, gaining liquidity before an impulse move. The MACD indicator has become negative again. Buy trades can be considered from the level of 0.9912. Sell deals are best to look for from resistance levels of 1.0111 or 1.0162.

Alternative scenario: if the price breaks down through the support level of 0.9912 and fixes below, the downtrend will likely resume.

News feed for 2022.09.21:

– US Existing Home Sales (m/m) at 17:00 (GMT+3);
– US Fed Interest Rate Decision at 21:00 (GMT+3);
– US FOMC Statement at 21:00 (GMT+3);
– US FOMC Economic Projections at 21:00 (GMT+3);
– US FOMC Press Conference at 21:30 (GMT+3).

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.1411
Prev Close: 1.1379
% chg. over the last day: -0.28 %

According to analysts, the Bank of England has not yet determined the size of the interest rate hike this week. The situation is complicated by the government’s recently announced energy price guarantee. This will limit households’ energy bills for the next two years and probably significantly reduce short-term inflation forecasts while likely boosting inflation in the medium term. A 50 basis point increase would bring the bank rate to 2.25%. That said, only one bank representative favors a 25 basis point increase. This week’s meeting will also decide on a balance sheet reduction. The bank intends to sell 10 billion pounds each quarter to reduce the balance sheet by 80 billion pounds a year. However, the sales will depend on economic and market conditions.

Trading recommendations

Support levels: 1.1351, 1.1300
Resistance levels: 1.1449, 1.1626, 1.1693, 1.1816, 1.1901, 1.1994, 1.2035, 1.2167

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame has changed to bearish. The price is currently trading at the level of the moving averages and forming a balance. The MACD indicator is in the negative zone, with sellers’ pressure. The price may be forming a false breakdown zone now, which can be used as a support if the price again consolidates above the level of 1.1449. Sell trades are better in the intraday time frames, and the nearest resistance level is 1.1626.

Alternative scenario: if the price breaks out of the 1.1693 resistance level and fixes above it, the uptrend will likely resume.

News feed for 2022.09.21:

– US Fed Interest Rate Decision at 21:00 (GMT+3);
– US FOMC Statement at 21:00 (GMT+3);
– US FOMC Economic Projections at 21:00 (GMT+3);
– US FOMC Press Conference at 21:30 (GMT+3).

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 143.19
Prev Close: 143.70
% chg. over the last day: +0.35 %

The yen has temporarily strengthened recently due to news that the Bank of Japan has conducted a currency “check,” a move seen as a precursor to official intervention. Bank of Japan Governor Kuroda said that intervention was “on the table” and, if necessary, it would be carried out quickly and without warning. Meanwhile, Japanese Finance Minister Shunichi Suzuki said that the Bank of Japan would appropriately guide policy, considering prices and the state of the economy. He confirmed that reserve funds would be used for core output and price increases, hinting that additional support measures, rather than currency intervention, may be introduced. Analysts believe that the Bank of Japan (BOJ) is unlikely to change its policy before the end of the year.

Trading recommendations

Support levels: 142.57, 141.77, 141.00, 139.61, 138.78, 137.65, 136.80, 135.20
Resistance levels: 144.21, 145.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading at the level of the moving averages and forming a balance. The MACD indicator has become positive, and there is a slight buying pressure. Under such market conditions, buy trades can be sought from the support level of 142.57 or 142.10, but with additional confirmation. Sell deals can be searched for on intraday time frames from the resistance level of 144.21 or 145.00, but only with additional confirmation, as fundamentally, USD/JPY quotes are inclined to grow.

Alternative scenario: If the price fixes below 141.00, the downtrend will likely resume.

News feed for 2022.09.21:

– US Fed Interest Rate Decision at 21:00 (GMT+3);
– US FOMC Statement at 21:00 (GMT+3);
– US FOMC Economic Projections at 21:00 (GMT+3);
– US FOMC Press Conference at 21:30 (GMT+3).

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.3248
Prev Close: 1.3366
% chg. over the last day: +0.89 %

Canada has seen a decline in inflation indicators. For example, the annual consumer price index declined from 7.6% to 7.0%. Core inflation (which excludes food and energy prices) also declined from 6.1% to 5.8% in annual terms. This is the second month in a row that Canada has seen a decrease in annualized inflation, indicating a slowdown. However, it should be noted that the Bank of Canada currently keeps the interest rate at 3.25%, the highest among the major economies. Analysts think that the drop in inflation will cool down the aggression of the Bank of Canada, and its next steps will either be the minimum or the central bank will take a break. Against the backdrop, the Canadian dollar is losing ground against the dollar, as the US Fed is going to raise its interest rate again today.

Trading recommendations

Support levels: 1.3298, 1.3212, 1.3053, 1.2990, 1.2958, 1.2936, 1.2900
Resistance levels: 1.3390

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The MACD indicator has become inactive, there is buying pressure, but the divergence is increasing. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3298 or 1.3212. For sell deals, it is better to consider the resistance level of 1.3390, but only after an additional confirmation in the form of a false breakout.

Alternative scenario: if the price breaks down and consolidates below the 1.2990 support level, the downtrend will likely resume.

News feed for 2022.09.21:

– US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
– US Fed Interest Rate Decision at 21:00 (GMT+3);
– US FOMC Statement at 21:00 (GMT+3);
– US FOMC Economic Projections at 21:00 (GMT+3);
– US FOMC Press Conference at 21:30 (GMT+3).

By JustForex

Financial News Forex and Currency News

21 Sep

The main focus for investors today is the US Federal Reserve’s interest rate meeting

By JustForex

The US indices fell on Tuesday as investors raised their bearish rates over fears that the Federal Reserve might signal a continuation of aggressive rate hikes. The Fed’s willingness to continue tightening monetary policy brings the economic recession closer. The bond market continues to signal the risk of a broader recession as the continued inversion in the key part of the Treasury yield curve has intensified further. As the stock market closed on Tuesday, the Dow Jones Index (US30) decreased by 1.01%, and the S&P 500 Index (US500) lost 1.13%. The NASDAQ Technology Index (US100) fell by 2.52% yesterday.

The Fed has an important monetary policy meeting today. Analysts expect the US Federal Reserve to raise interest rates by 0.75% for the third time in a row. If the data is worse than expected and the Fed raises the rate by 1%, the dollar index may see upward momentum. If, on the contrary, the Fed raises interest rates by 0.5%, the dollar index is likely to fall sharply as the Fed is less aggressive. If the fact is as expected, there is a high probability that the market will just temporarily increase volatility.

ECB head Christine Lagarde said yesterday that Europe is experiencing a record-high inflation rate for the tenth month in a row, and this streak will continue soon. When inflation is high, monetary policy cannot remain expansionary. That is why the ECB is pursuing a strategy of monetary policy normalization. Normalization involves stopping net asset purchases and then raising rates to a neutral level that is neither stimulative nor restrictive. This is why the ECB has not only begun to raise interest rates but has indicated that it expects to raise interest rates further over the next few meetings. The ECB will reconsider whether the normalization strategy is enough to return to 2% inflation in the medium term.

The Netherlands imposed price caps on gas and electricity on January 1.

Oil falls ahead of the Fed’s interest rate decision. The dollar rose for the third time in four sessions, adding weight to oil prices as industry analysts forecast a third consecutive weekly increase in domestic crude inventories.

Gold prices are stuck at $1,600 a dollar, falling for the fifth time in six days. The rise in the dollar index is the main catalyst for gold’s weakness. Gold has lost about 4% in the last six sessions. Gold and silver could fall sharply if Powell can convince markets today not only that they will continue to aggressively tighten policy but that they will keep rates in place even as the economic downturn worsens.

Putin has announced a partial military mobilization in Russia. The Kremlin is still not calming down and has once again begun to intimidate Ukraine and the West with nuclear weapons.

Asian markets traded lower yesterday. Japan’s Nikkei 225 (JP225) gained 0.44%, Hong Kong’s Hang Seng (HK50) added 1.16% on Tuesday, while Australia’s S&P/ASX 200 (AU200) was up by 1.29% on the day.

China kept its benchmark lending rates on hold on Tuesday, as expected, as authorities postponed immediate monetary policy easing after a sharp drop in the local currency. The benchmark one-year lending rate (LPR) was kept at 3.65%, while the five-year LPR remained unchanged at 4.30%. Analysts believe that the growing divergence in the US and Chinese monetary policy could heighten fears of capital flight from China as Beijing seeks to mobilize resources to restore sluggish growth.

S&P 500 (F) (US500) 3,855.93 −43.96 (−1.13%)

Dow Jones (US30) 30,706.23 −313.45 (−1.01%)

DAX (DE40) 12,670.83 −132.41 (−1.03%)

FTSE 100 (UK100) 7,192.66 −44.02 (−0.61%)

USD Index 110.15 +0.41 (+0.38%)

Important events for today:

– US Existing Home Sales (m/m) at 17:00 (GMT+3);
– US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
– US Fed Interest Rate Decision at 21:00 (GMT+3);
– US FOMC Statement at 21:00 (GMT+3);
– US FOMC Economic Projections at 21:00 (GMT+3);
– US FOMC Press Conference at 21:30 (GMT+3).

By JustForex

Economics & Fundamentals Financial News

20 Sep

Forex Technical Analysis & Forecast 20.09.2022

Article By RoboForex.com

EURUSD, “Euro vs US Dollar”

EURUSD is still consolidating around 0.9992; it has already expanded the range up to 1.0049 and is currently falling to return to 0.9992. If later the price breaks this range to the downside, the market may form a new descending wave to reach 0.9800; if to the upside – resume trading upwards with the target at 1.0200.

GBPUSD, “Great Britain Pound vs US Dollar”

GBPUSD continues growing towards 1.1472 and may later start another decline to reach 1.1380. If later the price breaks this range to the downside, the market may resume trading downwards to reach 1.1212; if to the upside – form one more ascending wave with the target at 1.1550.

USDJPY, “US Dollar vs Japanese Yen”

USDJPY is still consolidating around 143.25 without any specific direction. Possibly, today the pair may expand the range up to 144.00 and then fall to return to 143.25. If later the price breaks this range to the upside, the market may form one more ascending wave to reach 144.99; if to the downside – resume trading downwards to break 141.99 and then continue falling with the target at 140.99.

USDCHF, “US Dollar vs Swiss Franc”

After finishing the ascending wave at 0.9694 along with the correction down to 0.9630, USDCHF is expected to resume trading upwards with the short-term target at 0.9713.

AUDUSD, “Australian Dollar vs US Dollar”

AUDUSD has completed the ascending wave at 0.6740; right now, it is falling towards 0.6690. If later the price breaks this range to the downside, the market may form a new descending wave to reach 0.6600; if to the upside – resume trading upwards with the target at 0.6800 and then start another decline towards 0.6525.

BRENT

Brent has finished the descending wave at 88.60; right now. it is growing towards 93.00 and may later correct down to 90.50. After that, the instrument may start another growth to reach 97.00, or even extend this structure up to 100.00.

XAUUSD, “Gold vs US Dollar”

Gold is still consolidating around 1668.60. Today, the metal may fall to reach 1660.00 and then resume growing towards 1683.11. Later, the market may start a new decline to reach 1652.00 and then form one more ascending wave with the target at 1700.00.

S&P 500

After completing the descending structure at 3832.0 and then returning to test 3912.0 from below, the S&P index is expected to start another decline with the target at 3770.0.

Article By RoboForex.com

Financial News Forex and Currency News

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