– USDOLLAR Maintains Weekly Range Ahead of FOMC Announcement
– British Pound Climbs to Fresh Month High (1.5978) on BoE Policy
Index
Last
High
Low
Daily Change (%)
Daily Range (% of ATR)
DJ-FXCM Dollar Index
10603.64
10627.72
10599.11
-0.12
60.95%
USDOLLAR Daily
Chart – Created Using FXCM Marketscope 2.0
USDOLLAR Continues to Carve Higher Low; RSI Coming Up Against Oversold
Key Resistance: 10,803 (38.2 retracement) to 10,806 (78.6 expansion)
Major Support Still in Play at 10,582 (23.6 expansion) to 10,589 (50.0 retracement)
Release
GMT
Expected
Actual
Housing Starts (AUG)
12:30
917K
891K
Housing Starts (MoM) (AUG)
12:30
2.3%
0.9%
Building Permits (AUG)
12:30
950K
918K
Building Permits (MoM) (AUG)
12:30
-0.4%
-3.8%
Federal Open Market Committee Interest Rate Decision
18:00
0.25%
?
Fed Releases Summary of Economic Projections
18:00
FOMC Mortgage-Backed Securities Purchases
18:00
$40B
?
FOMC Treasury Purchases
18:00
$35B
?
Fed Chairman Ben Bernanke Holds Press Conference
18:30
The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) is struggling to hold its ground ahead of the Federal Open Market Committee (FOMC) interest rate decision as market participants mull the outlook for monetary policy, but the fresh developments coming out of the central bank may encourage a more meaningful recovery in the reserve currency should the Fed move away from its highly accommodative policy stance.
Despite forecasts for a $5B cut in the Fed’s bond-buying program, we may see a more material shift in the policy outlook as the central bank anticipates a stronger recovery for the U.S. economy, and the central bank’s forward-guidance may highlight a greater willingness to implement the exit strategy ahead of schedule as the
Should the Fed taper the asset-purchase program and/or lay out a more detailed exit strategy, the two scenarios could foster a near-term rally in the USDOLLAR, but the greenback may face a sharp selloff should the FOMC show further support for its highly accommodative policy stance.
GBPUSD Daily
Upward Trending Channel Remains Intact; 1.6000 Handle in View
RSI Maintains Bullish Trend; Need a Close Below 70 to See Correction
Key Resistance: 1.6040 (100.0 expansion) to 1.6050 (78.6 retracement)
Former Resistance to Offer Support: 1.5680-90 (38.2 retracement)
Two of the four components advanced against the greenback, led by a 0.42 percent rise in the British Pound, and despite the overbought signal, the GBPUSD may continue to march towards the 1.6000 handle as the Bank of England (BoE) appears to be slowly moving away from its easing cycle.
Indeed, the BoE Minutes suggests that the Monetary Policy Committee will implement its exit strategy ahead of schedule as the central bank scales back its willingness to expand the balance sheet further, and the shift in the policy outlook should prop up the sterling over the near to medium-term as the economic recovery in the U.K. gathers pace.
In turn. the the GBPUSD continue to mark fresh months highs amid the positive developments coming out of Britain, and we will wait for the RSI structure to close below 70 to see a more meaningful correction take shape.
— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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Source: Daily fx