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UFXBank Forex Outlook: Dollar Down on Fed Statements

Written by UFXBank Research Team
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USD Dollar (USD) – The Dollar was down against the other major currencies after the Federal Reserve said it’s willing to ease monetary policy further to bolster the U.S. economy. In addition, the interest rate stayed at 0.25% and the Housing Starts data increased in august (0.60M vs. 0.55M forecast), easing concerns that the recovery in the world’s largest economy may be stumbling.  The NASDAQ weakened by 0.28% and the Dow Jones fluctuated around 0, closing at + 0.07%. Crude oil weakened by 1.8%, closing at $73.50 per barrel. Gold (XAU) rose to another new record during the session (above 1290$), dropping some by the end, but still strengthening by 0.4% to close at $1283 an ounce. No major economic data is expected today.

EURO (EUR) – The Euro strengthened to a six week high against the Dollar as a result of statements by members of the Federal Reserve's Open Market Committee. The momentum of the EUR/USD is still bullish for the euro, and as long it is above the 1.3100 level, a long position is preferred. The next resistance line on the daily chart is 1.3340, and the 10 moving average supports an uptrend as well. Overall, EUR/USD traded with a low of 1.3059 and with a high of 1.3286. Today, Industrial New Orders are expected to become negative from 2.5% prior to -1.20% forecast.

EUR/USD – Last: 1.3297

Resistance

1.3312

Support

1.3160

1.3030

1.2960

British Pound (GBP) – The Pound weakened versus the Dollar and Euro during the European Forex trading session, dropping against the Euro to the lowest level in two months, as a report showed the U.K.’s budget deficit widened more than forecast in August. At the end of the US session, the pound succeeded to rebound some versus the Dollar after the US Federal Reserve statements. The main support of the GBP/USD on the daily chart is still 1.5500, and if the pair goes below this rate, it will probably continue to decline. The resistance on the one hour chart is 1.5650, and if it goes above this line, it will continue to rise. Overall, the GBP/USD traded with a low of 1.5503 and with a high of 1.5644. Today, MPC Meeting Minutes will be released.

GBP/USD - Last: 1.5664

Resistance

1.5685

1.5730

Support

1.5600

1.5500

1.5430

Japanese Yen (JPY) –The Yen reached the strongest level against the Dollar since Sept. 15, as a result of the interest rate statement by U.S. Federal Reserve policy makers. The USD/JPY has been fluctuating the past few days. The support on the daily chart is 84.75, and if the pair goes below the support line, the trend will become bearish. Overall, USD/JPY traded with a low of 84.98 and with a high of 85.72. No economic data is expected today.

USD/JPY-Last: 84.87

Resistance

85.25

86.00

Support

84.70

Canadian dollar (CAD) – The Canadian Dollar rose against the US Dollar after the Federal Reserve said it is willing to ease monetary policy further to boost the economy, which increased demand for assets that benefit from global growth. The momentum of the USD/CAD is still negative for the US Dollar, and as long the USD/CAD below 1.0350 levels, a short position is preferred. The next support on the daily chart is located at 1.0200. Overall, USD/CAD traded with a low of 1.0216 and with a high of 1.0331. Today, Core Retail Sales are expected to rise from -0.5% to +0.4%, and the Leading Index is expected at 0.5% vs. 0.4% prior.

USD/CAD - Last: 1.0248

Resistance

1.0290

1.0320

1.0350

Support

1.0215