Forex Update: Dollar Drifts Lower With All Eyes on the Fed
Forex Market Snapshot
|Asset||Current Value||Daily Change|
|WTI Crude Oil||48.53||-1.32%|
With just one day left until the week’s main event, the Fed’s rate decision, it’s no surprise that forex markets are having a very choppy session, with the Dollar and the main safe-haven assets being in focus. The USD has been under pressure in the last couple of days amid the louder and louder critiques regarding the Fed’s rate hikes, and although economic numbers continue to be positive in the US, and the consensus still points an increase tomorrow, leaving the rates unchanged wouldn’t be as shocking as one week ago.
Economic numbers were mixed today, with the German IFO index missing the consensus estimate, but with the US housing market showing stability for the second month in a road. Building permits and Housing Starts both bounced back more than expected amid the pullback in Treasury yields in November, pointing to a still relatively healthy economy in the US.
While the Dollar only managed a small pop higher following the releases, as Treasury yields plunged to new multi-month lows again, the underlying bullish trend seems safe for the reserve currency.
GBP/USD, 4-Hour Chart Analysis
The Great British Pound is having another active session, and although it briefly surpassed the crucial 1.27 level against the Dollar, it fell sharply later on, leaving last week’s key technical breakdown intact. While choppy trading is expected across the forex segment up until tomorrow’s key Fed announcements, the Pound could remain active, with the Brexit chaos and Theresa May’s shaky position still causing headaches for traders.
EUR/JPY, 4-Hour Chart Analysis
While risk assets rebounded today after yesterday’s volatile and bearish session, the main safe-haven assets, such as the Japanese Yen and gold continue to perform well, especially compared to the risk-on currencies. The EUR/JPY pair which has been trading in a broad bearish consolidation pattern since October is testing the key support zone between 127.50 and 127.75, threatening with a key breakdown in the coming weeks. While the short-term momentum indicators are slightly oversold, the pair is clearly bearish both short- and long-term and traders should be looking for entry points on the short side.
USD/CNH, 4-Hour Chart Analysis
Some analysts call the Dollar/Yen pair “most important currency pair of 2019”, and the pair continues to trade in the close vicinity of its October low, despite the recent trade-related optimism. A clear dovish surprise tomorrow could send the Yuan soaring, even in light of the recent weak Chinese economic data, but for the coming months, new highs are very likely (meaning new lows for the Yuan), and a drop to 6.85 would be an optimal entry point for traders.
WTI Crude Oil, 4-Hour Chart Analysis
Oil continues to be in a steep broader downtrend, and despite the deeply oversold long-term momentum readings, the crucial commodity only managed to consolidate in a sideways trading range after dipping below the key $50 per barrel price level in the WTI contract.
Yesterday, the price of the contract fell below its prior low, and today the commodity plunged by more than 5%, violating the $47.50 per barrel level for the first time since mid-2017. Barring a quick recovery, the breakdown could extend to the $44 per barrel level but a strong support zone is already found between $46.50 and $47.
Key Economic Events Tomorrow
EUR/USD, 4-Hour Chart Analysis
USD/JPY, 4-Hour Chart Analysis
EUR/GBP, 4-Hour Chart Analysis
AUD/USD, 4-Hour Chart Analysis
AUD/JPY, 4-Hour Chart Analysis
GBP/JPY, 4-Hour Chart Analysis
USD/CHF, 4-Hour Chart Analysis
Gold Futures, 4-Hour Chart Analysis
Copper Futures, 4-Hour Chart Analysis
Major Stock Indices
S&P 500 Futures, 4-Hour Chart Analysis
DAX 30 Index CFD, 4-Hour Chart Analysis
Nikkei 225 Futures, 4-Hour Chart Analysis
Shanghai Composite Index CFD, 4-Hour Chart Analysis
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