Greenback Weakens as FOMC Begins Monetary Policy Meeting

The price of crude oil was relatively unchanged today as investors continued to monitor the happenings in the Middle East. The United States are blaming Iran for the attacks and the Trump administration, along with Saudi Arabia, are considering how to respond to the attacks. On Sunday, Trump said that the US was locked and loaded and ready to retaliate. However, experts believe that Trump has very little options. While the administration can easily target Iranian oil facilities, that would risk a prolonged conflict and lead to higher prices. Failure to respond will lead to more similar attacks. 

The US dollar weakened slightly as the Federal Reserve officials started their meeting. The Fed meeting comes at a time when the world is facing serious challenges. Growth in the United States and in the rest of the world has weakened. This was evidenced yesterday after the release of weak industrial, capital investments, and retail sales from China. In the United States, the economy expanded slightly above 2% in the second half of the year after rising by 3.1% in the first quarter. Worse, oil prices have soared by almost 20% this week, which is not a good thing for the United States. Traders will be paying close attention to the Fed’s decision and the subsequent statement.

The euro rose slightly against the sterling and the US dollar after traders received the sentiment data. In Germany, the ZEW current conditions survey declined to -19.9 from the previous -13.5. This was worse than the consensus estimates of -15. On a positive note, the economic sentiment improved to -22.5 from the previous -44.1. This data measures the sentiment for the next six months. A reading below zero indicates pessimism on the economy. In the EU, the economic sentiment improved to -22.4 from the previous -43.6.

EUR/USD

The EUR/USD pair rose to an intraday high of 1.1025 from a low of 1.0990. The price is between the 50% and 61.8% while the price is slightly above the 15-day and 25-day moving averages. The accumulation/distribution indicator has moved slightly higher. The same is true with the momentum indicator. The pair will likely remain along the current levels ahead of the Fed statement tomorrow.

XBR/USD

The XBR/USD pair remained at elevated levels today as investors continued to wait on more news from the region. The pair is trading at 67.08, which is along the middle line of the Bollinger Bands. The RSI has moved slightly below the overbought level of 70 while the on-balance volume has also continued to rise. The pair could make some major moves in the American session if there are any statements about Iran and Saudi Arabia.

USD/CHF

The USD/CHF pair rose today after SECO released its economic projections for Switzerland. The pair reached the important resistance level of 0.9955, which is above the 14-day and 28-day moving averages. The RSI has moved close to the overbought level of 70. The pair could move lower to test the previous support of 0.9865.