The markets continue to consolidate at the achieved price levels in anticipation of the outcome of today's meeting of the Federal Reserve. It is not the fact of the projected increase in the interest rate by 0.25% that will be of great importance, but the tone of the comments of the regulator's representatives, which will strengthen or weaken expectations regarding the pace of further tightening of monetary policy.
Depending on this, the movement of quotations in the nearest trading sessions will be determined. The technical picture of the last few days, in my opinion, signals a corrective nature, which should lead to the strengthening of the US dollar. How right is this position, we learn very soon.
Today before 21:00 Moscow time, the lateral dynamics of quotations is predicted, which sharp price movements will then replace. With that in mind, I urge caution for participants, since the reaction can be very heavy.
From the published economic statistics today, at 17:00 Moscow time, we have sales of new housing in the US, which will either confirm the trend in recent months to reduce the volume of transactions, or point to the temporary nature of the negative dynamics. However, once again I want to note that the main attention of the participants today is focused on the Fed's press conference.
According to the results of yesterday's trading, the technical picture of the EUR/USD pair has not changed. Prices continue to consolidate in the range 1.1700-1.1800, waiting for the outcome of today's meeting of the Fed. Before they are announced, prices will make lateral fluctuations. At the same time, during the last trading sessions, the formation of signals indicating the probability of corrective movement continued, as mentioned in yesterday's overview. The negative dynamics of quotations is predicted up to reaching the area around the level of 1.1640, through which the 200-periodic MA is currently passing. Whether we interpret correctly the signals of technical analysis that speak of the subsequent strengthening of the US dollar, or it is a wrong point of view, we will learn tonight. Zones of support and resistance are still located in areas 1.1625-1.1640 and 1.1780-1.1800, respectively.
The positive dynamics of GBP/USD quotes observed since mid-August is considered by me as the formation of the right shoulder of the head-shoulders technical analysis figure. The top of the left shoulder of the figure is in the region of 1.3500-1.3575 and is located between September 15-22, 2017. As the head of the figure, we can consider the price range 1.4000-1.4300, in which the pair traded from January 24 to April 20 this year. The top of the right shoulder is 1.3300, almost reached in the second half of last week. Based on this technical interpretation of the dynamics of quotations, it is concluded that the period of strengthening the US dollar is likely to begin with the purpose of updating the minimum prices for the current year below 1.2700. Perhaps the beginning of this process will be at today's meeting of the American regulator. In previous overviews, attention was repeatedly paid to the signals of technical analysis indicating the probability of corrective price movement after positive dynamics in the last few weeks.
Support zones are consistently located in areas 1.3015-1.3040 (200-periodic MA on the time frame of H4) and 1.2900-1.2910 (green ovals).
The resistance zone is still present in the range 1.3190-1.3205 (red oval).
The USD/JPY pair continues to consolidate just before the announcement of the results from the Fed meeting. The quotes are below the 113.00 mark, while the technical analysis signals indicate an ongoing process of forming a divergence between local highs and the corresponding MACD indicator values. Based on this, an assumption is made about the probability of corrective movement. As noted in yesterday's overview, the goal of the decline is the area near the 112.00 mark, through which the 200-periodic MA passes on the time frame of H4. The support and resistance zones have not changed at the end of yesterday's trading and are located in the areas of 112.05-112.25 (green oval) and 112.85-113.05 (red oval), respectively.
Quotations of the pair USD/CHF on Tuesday were in the side corridor with the borders of 0.9630-0.9670. The consolidation of prices is explained by the expectation the players of the results from today's Fed meeting. The technical picture of the pair signals the probability of strengthening the US dollar. Previous reviews mentioned the formation of convergence between local minima on August 31, September 18 and 21 and the corresponding MACD indicator values. Today, before the press conference of the Head of Federal Reserve, Jerome Powell, at 21:30 Moscow time, prices will continue to consolidate, after which a strong movement will begin. I predict the growth with the initial goal of raising around 0.9700. The accuracy of this prediction will be revealed tonight. The support zone is in the area of 0.9590-0.9605 (green oval on the chart).
The resistance is located in the range of 0.9695-0.9705 (red oval).
Thus, over the past few weeks, I have consistently expressed my point of view about the strengthening of the US dollar. The reaction of the markets to today's meeting of the Federal Reserve either confirms this opinion, or refutes it. And what do You think about that?