For a long time, traders considered American Non-farm Payrolls (NFP) the most important release in the market. However, the situation has changed. Now US CPI moves financial markets.
Trading plan for November 8
Today the European session will be mostly quiet, with the European Union economic forecasts released at 12:00 MT time. However, this indicator is expected to have a limited impact on the currencies.
The most important 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 after 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 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 price of the gold managed to rise amid the elections, however, as the USD straightened, the asset stick below the pivot point at $1,227. The strong USD will pull the price farther, towards the psychological support at $1,217 , which is also 100-day MA. If the dovish tone of the FOMC statement will result 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.
The higher prices seen today are generally related to the pandemic, that’s no doubt. US consumer prices jumped in October at the fastest pace in three decades putting the Biden administration on the defensive and increasing prospects that the Federal Reserve will raise interest rates next year. Jerome Powell says Fed will discuss speeding up bond-buying taper at the December meeting. What does it mean for markets?
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