The US equities edged higher once again during yesterday’s trading, the S&P500 had its strongest close since August while the Nasdaq 100 hit a 22-month high, amid rising treasuries. 10-year yield slipped below 4.4% nearing its lowest level since September 20th.
Today, all eyes are headed towards the FOMC meeting minutes, which might impact the markets as it should shed light on why the committee’s policy statement and Fed Chair Jerome Powell’s remarks were relatively dovish, despite strong economic data leading into the gathering.
However, since the Federal Reserve’s latest decision, there have been a lot of conflicting economic releases, including the US Jobs Report and inflation data, which both suggest that the Fed’s tightening cycle is officially over, and the Fed Fund Futures is now pricing in an earlier rate cut. Therefore, it should be no surprise if today’s FOMC meeting minutes do not lead to a notable impact on the markets.
USD index at the lowest level since August
The US Dollar Index continued to decline for the third consecutive session, including the Asian session today, reaching as low as 103.20, surpassing all targets, and reaching the lowest level since the end of August.
Technical indicators remain bearish in most time frames. However, the RSI is now oversold which may lead to a short-term retracement to the upside before the downside trend resumes. However, any upside retracement might remain below 104.50 and/or 105.0.
On the downside view, another leg lower is still possible, while the next support area stands between 103.0 and 102.90.
USDJPY near key support
USDJPY continues to decline for the fourth consecutive day, reaching the lowest level since mid-September at 147.20 driven by the US Dollar weakness.
In the meantime, the pair is nearing another key support area which stands between 147.0 and 146.40, and should be watched very carefully, as a break below this area could be the end of the upside trend, not only in the short term, but the medium term as well.
GBPUSD over 1.25
GBPUSD continued to rally for two days in a row, while it added another 0.20% in Asia, rising to as high as 1.2530, which is the highest level for the pair since September.
The technical indicators remain bullish on most timeframes and the RSI is still far from being overbought, which means that the pair might still have more room to go.
Stabilization above 1.25 is key, if so, another leg higher is highly possible in the coming days, while the next resistance area stands between 1.2555 and 1.26 where sellers might reappear. However, any downside retracement is likely to remain limited to above 1.24 for now.
AUD rises as risk sentiment improves
The Australian Dollar rose amid broad selling of the greenback as risk sentiment improved, while yields extended opening gains in Asia.
AUDUSD touched the 0.6590 resistance area in Asia which is also the highest level for the pair since August.
Technical indicators remain bullish on most time frames, while the RSI indicator is still far from being overbought, which keeps the bullish outlook unchanged, with a possibility to test 0.66 in the coming days, while a break above that area would clear the way for further gains.
Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.
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