USD moves to new lows ahead of the FOMC decision

The USD is the weakest of the major currencies and it is trading to new lows vs most of the major currencies in the current hourly bar. The only currency that the USD is not making a new low is the USDCAD, but it is still pushing toward that level.

The dollar is moving lower head of the FOMC rate decision. The Fed is largely expected to keep rates unchanged. The focus will be on what they feel going forward. The odds of a November hike heart 30% while a December hike are 40%. So the market is pricing in at least a chance of a hike between now and the end of the year.

The dot.pot from June had the Fed hiking one more time in 2023. That bias tilt is likely to remain. The question will be “Will the Fed increase the end of year for 2024?”. In the June dot plot, the Fed projection had the Fed cutting rates by 100 basis points in 2024 from 5.6% to 4.6%. That might be raised in this meetings projections.

EURUSD: The EURUSD moved above a cluster of resistance near the 1.0704 level (that is now support going into the FOMC rate decision), and took out the high price from yesterday’s trade 1.07175. The next target comes against the 38.2% retracement of the move down from the end of August high at 1.0751. Above that, it opens the door for a potential run toward the 50% midpoint of the same move lower at 1.0788. They moved back below 1.0704 would disappoint the brake buyers and have traders looking toward the 100 hour moving average of 1.06734.

USDJPY: The USDJPY has now moved below and away from its 100-hour moving average 147.695. The next target comes against the 200-hour moving average at 147.376. Will below that level and traders will look toward the 147.00 area where swing lows from September 12, September 13, and September 14 formed a floor before moving higher.

GBPUSD: The GBPUSD is breaking away from its 100-hour moving average at 1.23928, and now looks toward the high from yesterday at 1.24248. The 200-day moving average at 1.2434 and the 200 hour moving average of 1.24417 are the next key target on the top side. Get above those moving averages and it opens the door for further upside momentum. On the downside moving below the 100 hour moving average with momentum would disappoint the buyers and tilt the bias back to the downside.

USDCHF: The USDCHF is now trading below its 200-hour moving average of 0.8943 and has also cracked below a swing area between 0.8934 and 0.8947. Through the FOMC rate decision, staying below the 0.8947 level would be more bearish. Moving above it, we could see further upside momentum with the 100-hour moving average of 0.8966 the next key target to get to and through. Absent that type of move, I would expect more selling momentum with the 100-day moving average of 0.88809 as a key target to get to and through on the downside.

This article was written by Greg Michalowski at Source