The market takes breath after the long rally. What opportunities do traders have today?
News to trade on November 8
- The most significant event for today is the FOMC statement at 21:00 MT time. The rate hike is not expected, however, the tone of the statement may affect the USD. The Beige Book released on October 24 showed the Federal Reserve worries about the possible uncertainties. That is why most experts expect the dovish tone of the statement. However, the Fed can surprise with the hawkish data despite yesterday’s weakness of the USD.
If we look at the daily chart of the US dollar index, the index is trading within a range after the massive fall on November 1. On H1, yesterday’s falls during the day made the price to test the support at 95.72. However, it managed to rebound. The next strong resistance lies at 96.35. If the FOMC comments are hawkish, it can stick above 96.35. Otherwise, it can fall below 95.72.
How will it affect EUR/USD, GBP/USD, USD/JPY and gold?
- Yesterday’s news resulted in the mixed trades of EUR/USD, forming a Doji candlestick. If the USD gains back its strength, the pair can fall downwards to the support at 1.1380. If the greenback still weakens, the pair will rise towards 1.1461.
- Yesterday, the UK PM Theresa May showed a draft of the Brexit deal to her Cabinet. The next step will be the negotiations between the UK and European officials on the Irish border-free trade flows. In combination with the weak US dollar, it helped GBP/USD to cross the resistance at 1.3105.
However, new uncertainties keep coming from the news, affecting the pair. Today, EU chief Brexit negotiator Michel Barnier said they won’t soften their views on the Irish border backstop, until Theresa May works out a decent solution. According to the latest news, May asked European officials to give her more time to complete a deal with Cabinet members. More uncertainties will pull the cable down to the support at 100-day MA at 1.3105. Positive news, on the other side, will help the pair to rise upwards to the resistance at 1.3248.
- Rising Treasury yields help USD/JPY to rise towards the pivot resistance at 113.797. If the USD is supported by the hawkish FOMC, the pair can climb above 113.797. The next resistance lies at 114.405. If the USD is weak, the pair can fall. The support for the pair lies at 112.785.
- Yesterday the price of the gold managed to rise amid the elections, however, as the USD straightened, the asset stuck below the pivot point at $1,227. The strong USD will pull the price farther, towards the support at $1,217 , which is also 100-day MA. If the dovish tone of the FOMC statement results in the weak USD, the gold can gain. In that case, the resistance for the commodity lies at the central weekly pivot at $1,227.
In other news:
- The Reserve Bank of New Zealand monetary policy statement was out yesterday. The bank kept its interest rate at 1.75%. The statement included a possible rate rising in the 2nd or 3rd quarter of 2020. However, the RBNZ Governor added that the rate cut would be also possible in the near future. Despite the negative tone of the statement, NZD/USD tested the resistance at 0.6793 yesterday. If the USD gains amid the FOMC statement, the pair can fall towards 0.6719. Otherwise, it can stick above 0.6793.
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