USD/JPY awaits FOMC Statement; boost inbound

Technical Analysis

EUR/USD to move away from 1.1150

“The Fed is not on a fixed, premeditated path, but clearly they are biased to move away from emergency policy settings.”

- Westpac Banking Corp. (based on Bloomberg)

• Pair’s Outlook

  Unless the Fed postpones a rate hike beyond September, the Euro is likely to start negating recent gains. The falling trend-line and the monthly PP at 1.1150 continue to act as a ceiling, and any attack on this level should be repelled. The immediate support is the 100-day SMA, and while this can underpin the rate for some time, EUR/USD could re-test July’s low already next week. At the same time, a breach of 1.1150 will suggest an extension of a rally towards 1.13.

• Traders’ Sentiment

  The SWFX market participants remain slightly bearish towards the single currency. Right now 57% of them are short the Euro. As for the pending orders, there is currently no real difference between the buy (48%) and the sell (52%) ones.

GBP/USD risks retreating to 1.55

“Despite the very low inflation [in the UK] there are signs that the underlying inflation pressure is increasing, especially as wage growth has picked up more than expected.”

- Danske Bank (based on FXStreet)

• Pair’s Outlook

  The Cable behaved according to the forecast yesterday, as it managed to stabilise above 1.56 major level. However, the weekly R1 was not reached and will doubtfully be taken today, as a correction is expected. The support cluster around 1.5545 could limit the losses, while a drop further below towards the support trend-line is more likely. Furthermore, there is a chance of the trend-line being breached, which would result in the Sterling falling below 1.55. Meanwhile, technical studies retain their mixed signals, unable to confirm the bearish outcome.

• Traders’ Sentiment

  Bulls and bears have reached a perfect equilibrium today, whereas the number of buy orders declined from 55 to 53%.

USD/JPY awaits FOMC Statement; boost inbound

“We expect the Fed to refrain from a clear indication on the timing of the Fed's rate hike. We still expect a hike in September.”

- JP Morgan Chase Bank (based on CNBC)

• Pair’s Outlook

  Although the USD/JPY advanced on Tuesday, the 124.00 was not reached. Apparently, the US Dollar’s bullish momentum weakened after piercing the tough resistance area around 124.40, but, nevertheless, the given cluster is now providing substantial support. As a result, the Greenback is expected to maintain its rally and climb above the 124.00 psychological level. Nonetheless, risks of falling back towards 123.00 still persist, as the Fed might provide a more dovish statement today. Meanwhile, technical indicators keep supporting the possibility of the Buck outperforming the Yen.

• Traders’ Sentiment

  Traders’ sentiment remains unchanged, with 74% of all positions being long. The share of purchase orders edged up from 69 to 70%.

XAU/USD: risks skewed to the downside

“We still remain somewhat cautious about gold over the short-term, and suspect that the dollar could start to push higher over the balance of the week, possibly triggered by Wednesday's upbeat Fed policy statement.”

- INTL FCStone (based on CNBC)

• Pair’s Outlook

  The market is in a wait-and-see mode before the FOMC statement, but later in the day we are likely to see a spike in the volatility. The most probable move is to the downside towards the weekly S1, while in the longer-term the price is inclined to head in the direction of the 2010 low and 2008 high. This will be the main test of the sustainability of the current bearish momentum. However, an unexpected Fed outcome in the form of a later rate hike is unlikely to leave 1,100 intact. We will then look for a test of the 2014 low at 1,131.

• Traders’ Sentiment

  The sentiment is somewhat less bullish than yesterday, but still an overwhelming majority of the market participants, namely 72% of them, continue to hold long positions on gold.