FX Today: It’s the Fed; nothing else matters

Pablo Piovano FXStreet

The US Dollar (USD) managed to add to Monday’s optimism as market participants geared up for the last FOMC event of the year on Wednesday. Firm data from the weekly ADP report and JOLTS readings also reinforced the bullish move in the Greenback.

Here’s what to watch on Wednesday, December 10:

The US Dollar (USD) flirted with five-day highs near 99.30, trading at shouting distance from its critical 200-day SMA while helped by the persistent recovery in US Treasury yields across the curve. The Fed interest rate decision will take centre stage, alongside the weekly MBA Mortgage Applications, the Employment Cost index, and the EIA’s weekly report on US crude oil stockpiles.

EUR/USD came under further pressure, down for the fourth day in a row and confronting its provisional 55-day SMA near 1.1600. Absent data releases, the focus of attention on the domestic calendar will likely be on speeches by the ECB’s Machado, Lagarde, and Donnery.

GBP/USD slipped back to four-day lows, breaking below the 1.3300 support following the better tone in the Greenback and despite hawkish remarks from BoE officials. Next on tap across the Channel will be the release of the RICS House Price Balance on December 11.

USD/JPY climbed markedly, hitting multi-day tops in levels just shy of the 157.00 barrier, extending the move higher for the third straight day. The key Reuters Tankan Index is due, seconded by Producer Prices.

AUD/USD rapidly faded Monday’s bearish price action and resumed its uptrend well north of 0.6600 the figure backed by the cautious stance from the RBA. Next of relevance in Oz will be the publication of the jobs report on December 11.

Prices of the American WTI dropped to multi-day lows, approaching the $58.00 mark per barrel as traders continued to closely follow developments on the Russia-Ukraine peace talks and the upcoming Fed meeting.

Gold prices hovered around the $4,200 region per troy ounce, up modestly for the day amid rising expectations ahead of the Fed gathering on Wednesday. Silver prices advanced further, this time exceeding the key $60.00 mark per ounce for the first time in history.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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EUR/USD faces the next support around 1.1600

EUR/USD comes under pressure and retreats for the fourth day in a row on Tuesday, coming closer to the key 1.1600 neighbourhood amid a decent rebound in the US Dollar ahead of the largely expected 25 basis point rate cut by the Federal Reserve on Wednesday.

GBP/USD remains offered below 1.3300

GBP/USD is coming under renewed pressure, surrendering its earlier gains and retreating toward the area below the key 1.3300 support, always on the back of the bid bias in the Greenback and despite earlier hawkish comments from BoE poliymakers.

Gold comfortable above $4,200

Gold is still holding a positive tone around the $4,200 zone per troy ounce on Tuesday, though it’s starting to lose a bit of steam as the US Dollar finds support from stronger-than-expected jobs data. Even so, markets remain confident the Fed will move ahead with a rate cut on Wednesday, which ultimately lends support to the yellow metal.