U.S. Dollar Traders Expect FOMC Minutes While Sterling Keeps a Declining Path

U.S. dollar has been broadly higher while traders expect the FOMC minutes and two speeches from Fed’s members. Euro slipped despite positive data from the ZEW survey while sterling keeps its declining path. The USD/CHF pair surpassed our suggested target at 0.9870 while the NZD/USD fell to a 2-month fresh low.

U.S. Dollar Traders Expect FOMC Minutes

The U.S. dollar has been traded broadly higher yesterday with exception, against the Australian and New Zealand dollars, and against the Japanese yen. However, the moderate affecting indicators came out for the U.S., were not much optimistic. The NFIB business optimism index for September slipped to 94.1 below market expectations of 95.2. The labour market conditions index for September also decreased to -2.2 from -1.3 before. Fed’s William Dudley and Esther George will speak later in the day while the FOMC minutes will be published. We wouldn’t be surprised if the minutes do not include anything new. Fed Chairwoman Yellen said that she would be satisfied if the labour market continues on the same pace and expressed confidence for the economic growth, but not enough to make a move. Although a pick-up of the inflation rate towards Fed’s 2% target would be ideal.

Euro Fell Despite the Positive ZEW Survey

Despite the stronger than expected investor confidence, according to the ZEW Survey, the single currency dropped significantly against all the major currencies on Tuesday and early Wednesday with only exception the Norwegian Krone. EUR/USD fell to its lowest level in two months while the ZEW Survey revealed that economic sentiment in the Euro area picked up to 12.3 in October, the highest in four months. However, it’s still below pre-Brexit vote levels. The ZEW survey revealed that in Germany, economic sentiment and investors’ confidence are very high in October, however, the figures didn’t manage to bolster the single currency. Eurizone's industrial production is coming out later in the day, however, it’s doubtful if it will manage to support the dollar.

EUR/USD – Technical Outlook

The EUR/USD pair plunged more than 1.4% so far this week and penetrated the descending triangle to the downside, which was holding since August. The pair managed to slip below the 1.1120 strong barrier and reached our suggested target on our yesterday’s analysis at 1.1050 following the rebound on the 1.1200 critical level.

The technical structure remains further bearish movement while the price is moving towards the 1.0950 support level. In addition, the pair dropped below the significant obstacle, the 50-weekly SMA, endorsing the downward thought. On the daily chart, the price continues developing well below the three SMAs (50-SMA, 100-SMA, and 200-SMA) and the technical indicators are biased lower after entering the negative territory. The MACD oscillator is moving below its zero line whilst the RSI indicator is approaching the 30 level.

Pound Keeps the Path of Decline

The sterling remains on the path of decline against the buck and most of the other G10 currencies. On Friday, sterling crashed in seconds for no reason, to recover a few minutes later and since then it is in a sliding mode. The “hard-Brexit” fear dominated market headlines and each comment on that issue affects the sterling. Later today, the BoE MPC member Cunliffe will give a public speech.

GBP/USD – Technical Outlook

The dollar gains played a major role in sterling’s weakness yesterday while the GBP/USD pair plummeted more than 1.9% testing the 1.2100 psychological level. After the bounced off the latter level we expected a pullback towards the 1.2330 resistance level, however, the price is currently trading below it, near the 1.2250 price level. The next level to watch is the 1.2100 strong barrier while a successful break below it will open the way for the all-time low at 1.1978.

Technically, the pair is still establishing below the three SMAs (50-SMA, 100-SMA, and 200-SMA), while the technical indicators are rising in the negative territory. The MACD oscillator is moving above its trigger line whilst the RSI indicator lies below the 50 level.

USD/CHF – Technical Outlook

The USD/CHF pair over the last couple of months is establishing and trading within a consolidation area with upper band the 0.9960 resistance level and lower band the 0.9500 support barrier. The latter level will be significant for the bulls over the short and the medium terms as a break below there would change the bias from neutral to bearish. Additionally, the pair recorded a new 2-month high at 0.9890 and surpassed above our recommended second target at 0.9870.

Currently, the pair is making an attempt to break the 0.9890 resistance level and retest the 0.9960 strong obstacle. The price is moving above the three SMAs (50-SMA, 100-SMA, and 200-SMA) endorsing the bullish scenario while SNB Gov Board Member Zurbrugg will have a speech in a while and may affect the continuation of the trend. Technical indicators on the daily chart, are following the positive path and they are approaching the overbought areas.

NZD/USD – Technical Outlook

The NZD/USD pair recorded a fresh to 2-month low at 0.7050 and plunged more than 2.9% so far this month. However, the pair is trading in an uptrend since January and now is moving towards the ascending trend line.

The key level to watch is the 200-daily SMA which overlaps with the rising trend line, the 100-weekly SMA and the second support level of the pivot points, near the 0.7015 price level. So, the pair will have a strong rebound on the referred obstacles and will continue its upward potential move. On the other hand, If the price slips below the aforementioned obstacles then the commodity pair will probably retest the 0.6950 strong barrier. Going to a lower timeframe, the MACD oscillator is moving in a negative path with some weak momentum whilst the RSI indicator is sloping downwards and it is approaching the 30 level.

What to watch today

The day is starting with the SNB Governor Board Member Zurbrugg speech. During the European day, Eurozone’s industrial production is expected to rise in August on a mom basis to 0.6% from -1.1%.

In the U.S., the MBA mortgage approvals for the week to Oct 14 and the JOLTS job openings will be released. The big event of the day which traders will cautiously eye is the FOMC minutes which is scheduled to be published in the afternoon. Moreover, in U.K. we will get the RICS house price balance for September and overnight the CB leading economic index will be announced. In European midnight, Australia will release its consumer inflation expectation for October.