A 25 bps cut is largely priced in and may not move markets much unless guidance shifts. A 50 bps cut, however, would likely spark USD weakness, a Treasury rally, and could fuel a risk-on move in equities and gold.
The EUR/USD rallied to a four-year high of 1.1878 on Tuesday as investors ditched the Dollar on increased bets that the Federal Reserve will resume its easing cycle this week. The pair trades at 1.1865, up almost 0.90% at the time of writing.
The EUR/JPY trends higher for the second straight day, hits a six-day high of 173.83 as the technical picture, suggests that further upside is seen. At the time of writing, the cross-pair trades at 173.80, up 0.25%.
Gold price advances during the North American session after hitting a record high of $3,703 on Tuesday, poised to continue to trend up as traders await the Federal Reserve’s (Fed) monetary policy decision on Wednesday. At the time of writing, XAU/USD trades at $3,689, up 0.27%.
The Pound Sterling (GBP) advances over 0.30% as the Greenback drops to a ten-week low, according to the US Dollar Index (DXY). The two-day meeting by the Federal Open Market Committee (FOMC) begins on Tuesday, at which the Fed is expected to reduce interest rates.
What are the technicals driving the EURUSD, USDCHF and USDCAD after the US retail sales report? I will outline the bias, the targets and the risk levels for traders in the video.
West Texas Intermediate (WTI) Crude Oil continues its recovery on Tuesday, marking a third consecutive daily gain as supply risks stemming from fresh attacks on Russian refineries keep the risk premium intact. At the time of writing, WTI is trading around $63.68, up nearly 1.0% on the day.
The Euro (EUR) is strong, up 0.4% against the US Dollar (USD) and outperforming all of the G10 currencies on the back of a better than expected ZEW investor sentiment survey.
Gold (XAU/USD) marked a fresh all-time high around $3,703 on Tuesday after consolidating just below that level for most of the day. At the time of writing, the XAU/USD is easing modestly to trade around $3,687 but remains close to record territory.
Gold appreciated for the third consecutive day on Tuesday as the US dollar tanked amid hopes of a dovish turn by the Fed on Wednesday. The US Dollar Index has dropped to fresh two-month lows, which buoys the precious metal to fresh record highs right below $3,700.
Room for US Dollar (USD) to drop below 7.1100; any decline is likely to be slow, and 7.1000 may not come into view so soon, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
US Dollar (USD) is likely to trade in a range between 147.00 and 147.60. In the longer run, a narrower range of 146.20/148.50 is likely enough to contain the price movements for now, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
The dollar has started the week on the softish side. This may partly involve some pre-positioning ahead of tomorrow night's Fed rate cut. But it will also be a function of the benign external environment, ING's FX analyst Chris Turner notes.
Firmer underlying tone is likely to lead to New Zealand Dollar (NZD) trading in a higher range of 0.5955/0.5980. In the longer run, NZD could break above 0.5990; the scope for further advance may be limited, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
We've just seen the release of UK jobs data for August. Unlike in the US, where the 'solid' labour market crumbled this summer, payrolled job losses were only a modest 8k in August.
Australian Dollar (AUD) is likely to continue to edge higher, but it is unlikely to reach 0.6700. In the longer run, the price action continues to suggest a higher AUD; the next level to watch is 0.6700, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
The New Zealand Dollar has failed on its attempt to break the 0.5980 resistance area (September 11 high) earlier on Tuesday, but maintains its broader bullish trend intact amid the risk-on mood, with investors bracing for a Fed monetary easing on WednesdayThe US Dollar is trading lower across the bo
USD/CAD is struggling to clear the August high at 1.3920, signaling fading upside momentum. A sustained failure to break this level keeps risks skewed lower, with 1.3720 pivotal for the next move, Société Générale's FX analysts note.
Further Pound Sterling (GBP) strength appears likely; any advance is unlikely to reach 1.3660. In the longer run, price action suggests GBP could rise to 1.3635, potentially reaching 1.3660, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
EUR/USD remains near the upper end of its three-month trading range, with another test of 1.18 possible today. Despite a recent spike, implied volatility has retreated, underscoring calmer market conditions, Commerzbank's FX analyst Michael Pfister notes.
Upward momentum is starting to build; the odds of Euro (EUR) breaking above 1.1790 are increasing, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Political instability and missed fiscal targets are raising doubts about France’s ability to meet EU rules and avoid further rating downgrades. The path ahead looks highly uncertain, ING's FX analyst Chris Turner notes.
The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is extending its losses for the second consecutive session and trading around 97.10 during the European hours on Tuesday.
Silver’s (XAG/USD) is trying to break long-terrm highs at $42.75 on Tuesday’s Early European session, favoured by broad-based US Dollar weakness, as the market braces for a “dovish cut” at the end of a two-day Fed monetary policy meeting on Wednesday.Precious metals have been thriving in recent days
EUR/USD has received an additional boost from an unexpected improvement in Germany's Economic Sentiment, and rose to 1.1818, its highest level since early July, before easing to the 1.1800 area ahead of the US Session opening.
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