EUR/USD: Focus on Fed's forward guidance

The EUR/USD is sidelined around 200-hour MA.
The demand for EUR puts is on the rise ahead of the Fed.
The focus is on the Fed's forward guidance as rate hike has been priced-in.

Omkar Godbole FXStreet Contributor

The EUR/USD traded in a sideways manner in Asia around the 200-hour moving average (MA) of 1.1746 as investors turned cautious ahead of the all-important FOMC rate decision.

The market widely expects the Fed to hike rates by 25 basis points and the rate hike has been priced-in. So the focus will on Fed's forward guidance.

The US dollar may pick up a strong bid, sending EUR/USD well below 1.17 if the Fed signals faster rate hikes and pushes up terminal rate forecasts. However, if Fed delivers a dovish hike, then the EUR/USD could revisit recent high of 1.1840.

Options data indicate the investors could be bracing for a hawkish forward guidance. The one-month 25 delta risk reversals hit 12-day low today, signaling rising demand or rising implied volatility premium for the EUR puts.

EUR/USD Technical Levels

The EUR/USD has made its way below short-term consolidation triangle, as seen in the 4-hour chart, signaling the bears are gaining the upper hand. The chart also shows the accelerated trendline has been breached.

Resistance: 1.1769 (4H 10MA), 1.1822 (bearish/falling 4H 200MA), 1.1840 (recent high).

Support: 1.1715 (4H 100MA), 1.1652 (support on 4H chart), 1.1510 (recent low).

4-hour chart

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

Gold bulls seem hesitant below $4,500 amid modest USD bounce ahead of US NFP

Gold remains on the defensive below the $4,500 mark through the Asian session, snapping a two-day winning streak amid a modest US Dollar uptick. The commodity, however, remains close to the weekly high, which it touched the previous day, as traders keenly await the release of the closely watched US monthly employment details. The popularly known US Nonfarm Payrolls (NFP) report will provide more cues about the Fed's policy path amid receding bets of a September rate hike.

Bitcoin clears $80,000 on reduced rate hike odds – Zcash, Ethena rise

Bitcoin is trading above $80,000 on Friday, sustaining the broader cryptocurrency market's risk-on sentiment. Federal Reserve (Fed) Governor Christopher Waller signaled support for a potential pause in interest rates on Thursday, lowering the odds of a September rate hike to 50%. Zcash (ZEC) and Ethena (ENA) emerge as top performers over the last 24 hours.

NFP preview: Can jobs data ease rate hike fears?

As we move to the end of the week, the focus shifts to the macro data, and to the strength of the labour market in the US. August payrolls are released on Friday at 1330 BST, and the market is expecting a reading of 58k. The unemployment rate is expected to remain steady at 4.1% and wage growth is expected to moderate slightly to 3% last month, down from 3.2%.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.