It was a strong day for the USD yesterday. Dean is starting feel that the markets are going to be range bound ahead of the FOMC next week. FX traders may be hesitant to take big positions ahead of that meeting. The Forex markets seem to be suggesting that there will not be a rate hike at the meeting but not convinced.
There have been mixed messages from different quarters and this makes FX traders nervous.
Dean's Daily FX Update – 14 September 2016
The EURUSD has become very range bound. We moved our support and resistance levels yesterday from our Sunday levels. This compressed the range and it is now quite tight. The Bollinger Bands are squeezing together suggesting less volatility and less liquidity. It was also the only FX pair that did not really react to dollar strength and that concerns Dean. Not sure which way this pair will break.
Cable (GBPUSD) had a big move down yesterday after slightly disappointing inflation data. The FX market was expecting more and lower inflation potentially means lower economic activity. The pair punched through our support level but now becomes a bit of a waiting game. Dean looking for a bounce in this pair later this afternoon.
Similar action in the Aussie (AUDUSD) where we got through our support level and now the market has bounced a bit. Suggests that our support levels are valid and they are holding for the time being.
The USDCAD is where Dean will be looking for opportunities. The Loonie overshot our resistance zone at around 1.3120 but there is some divergence forming. The short term trend is up but the MACD is indicating downwards. A little patience is required and with some weakness in the oil price we need to keep an eye on that.
The USDJPY is in our area of interest to the top side. On the shorter time frames, we are starting to see this run out of a bit of steam and will be keeping a close eye on this FX pair.
The USDZAR has become very range bound too. It is possibly one to be avoided because outside influences can move this significantly. A little statement about Gordhan or similar could weaken or strengthen the market and with very little news coming out, it makes Dean nervous.
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