Market updates on July 31: the Fed decision

Key events ahead:

ADP Non-farm employment change for the US – 15:15 MT (12:15 GMT) time

Canadian GDP – 15:30 MT (12:30 GMT) time

FOMC statement – 21:00 MT (18:00 GMT) time

FOMC press conference – 21:30 MT (18:30 GMT) time

• The market is trading cautiously ahead of the Fed monetary policy statement at 21:00 MT time. On H4, EUR/USD is consolidating between the resistance at 1.1158 and the support at 1.1132. If the rate cut happens today, the USD will weaken. In that case, the break of the 1.1158 level will happen and the next resistance level will lie at 1.1174. After that, pay attention to the 1.1198 resistance level. If the Fed chair surprises the market with no changes to the interest rate, the pair will slide below the 1.1132 level to the next support at 1.1116. If this level is broken, the euro will fall towards the 1.1086 level. If we look at MACD we can see that it is placed closed to the 0 level, which signals a possible reversal.

• GBP/USD stopped falling and started to wait for the Fed to determine its further direction. If the Fed is dovish, the cable may break the 1.2168 level and target the next resistance at 1.2197. After that, bulls may push the pair higher to the 1.2225 level. In the case of the Alternative scenario, GBP/USD will move below the support at 1.2145. The next support will lie at 1.2118. If the pair manages to overcome this level, the further fall to the 1.2017 level may happen on the fears of a no-deal Brexit.

• USD/JPY has been trading sideways, too. After the end of a new round of US-China trade negotiations, Chinese policymakers said that the US needs to show enough sincerity in reaching a deal. The news pulled the USD/JPY pair lower during the Asian trading session. Now all eyes are on the Fed decision. If the rate cut is confirmed, the pair will fall below the 108.51 level. The next support will lie at 108.45. After that, the pair may reach the 108.33 level. From the upside, pay attention to the upper border of the consolidation range at 108.64-108.7. The next key level for bulls lies at 108.8.

• The FOMC statement will show whether the uptrend for gold will continue. On H4, the yellow metal has been knocking the resistance at $1,433. If it’s broken, the next resistance level will lie at $1,438. After that, the price for gold may reach $1,448 level. In case of the supported US dollar, the levels at $1,428, $1,424 (50-period SMA) and $1,420 will be in focus.

Similar

23.12.2020 08:54 USD/MXN: optimistic on the vaccine coming?

During the daily press briefing of Andres Manuel Lopez Obrador, it was announced that Mexico will receive 1.4 million doses of the vaccine by the end of January. Is that optimistic enough for the peso?

22.12.2020 08:00 The US jobless claims!

The US unemployment claims are announced on Thursday at 15:30 MT time.

21.12.2020 08:00 Will the Canadian dollar rise?

The Canadian monthly GDP is announced on Wednesday at 15:30 MT time.

Latest news

22.01.2021 09:02 USD strengthened as optimism waned

The market optimism waned amid stricter restrictions to control rising coronavirus infections. S&P 500 and Nasdaq dropped from the all-time highs, while the USD jumped higher.

21.01.2021 09:48 Stocks up, USD down

S&P 500 skyrocketed to the all-time high on optimism that Biden’s fiscal stimulus will support economic growth and boost corporate earnings.

20.01.2021 16:45 Lots and lots of PMIs on Friday

PMI reports from the EU, the UK, and the USA will be released during the day!