Market ahead of Fed meeting

Fundamentals

The US dollar keeps dipping further, while riskier assets are rising as investors await the FOMC meeting at 21:00 MT time. Most analysts expect that the central bank will increase its bond-buying program, which will push the USD down. On the flip side, the Fed may keep the status quo as the vaccine distribution has already started.
The GBP surged without any progress in the Brexit deal. The EU-UK sides keep negotiating, that’s why there are still hopes that the agreement can be done soon.
Gold has broken through $1 850 and keeps edging higher as the Fed is expected to ease policy, which in turn will lead to the weaker US dollar.
The day will be full of economic releases! The most important releases are the EU PMI at 11:00 MT time, the UK PMI half an hour later, then US core retail sales at 15:30 MT time, and the US PMI at 16:45, and finally the last FOMC meeting this year at 21:00 MT time.
How to trade PMI and retail sales? Compare actual numbers and forecasts. If actual numbers are better than forecasts, a currency will rise. If worse – a currency will drop.

Watch our daily trading plan!

Technical tips

EUR/USD

EUR/USD approaches the key resistance of 1.2170. It’s unlikely to cross it by the first attempt as it has failed to cross it several times. That’s why we can expect the price to pull back rather than break out. If it manages to break this level through, the way up to the next round number of 1.2200 will be clear. Support levels are at the 50-period moving average of 1.2130 and at the low of December 11 at 1.2110.

GBP/USD

The pound is rising due to the weak USD. If it manages to break the key psychological mark of 1.3500, the doors towards the high of December 4 at 1.3545 will be open. On the flip side, if GBP/USD dips below the support of 1.3400, the way down to the next one of 1.3300 will be clear.

Gold

XAU/USD gets closer to the 50-day moving average of $1 870. The price will struggle to cross it, so we can await a retracement. If it breaks this level finally, gold may jump to the next resistance of $1 890. Support levels are at yesterday’s low of $1 825 and the 200-day moving average of $1 810.

USD/CAD

USD/CAD is moving in a descending channel. If it crosses the support at yesterday’s low of 1.2700, the way down to the next round number of 1.2650 will be clear. Resistance levels are at the 50-period moving average of 1.2775 and 1.2820.

TRADE NOW

gbp

eur

usd

gold

cad - canadian dollar

FBS Analyst Team

More by this author

Similar

15.03.2023 15:42 Crucial News For The Following Week

Consumer Price Index, Existing Home Sales, US Fed rate decision - all of these things we will discuss in our new review. Don't miss it out!

30.01.2023 11:54 Market Crash Incoming?

This week may be the most important since the year started as the Fed assess the economic outlook and the US presents fresh NFP readings.

20.01.2023 15:54 What Currency Will Overperform?

S&P Global, a private banking company, will release a monthly change in British Flash Manufacturing Purchasing Managers Index (PMI) on January 24, 11:30 GMT+2. The index is a leading indicator of economic health as businesses react quickly to market conditions, and purchasing managers hold the most current and relevant insight into the company's view of the economy.