INCREASED CHANCE OF FED RAISING RATES SUPPORTS THE USD
The EUR/USD restored some positions that were lost yesterday on the background of hawkish rhetoric by the Fed’s chief Janet Yellen yesterday. Following the Fed’s statement on monetary policy it has become clear that 12 of the 16 FOMC members still support three rate hikes for 2017 which increases the chance of another round of monetary tightening in the US by this December. At the same time it was announced that the balance sheet reduction will start in October. Some pressure on the pair also came in from the better than expected unemployment claims in the US which were 259,000 versus the 302,000 expected and the Philly manufacturing index increased to 23.8 in September compared to 18.9 in August.
The USD/JPY quotes are consolidating after confident growth during yesterday’s trading session. The statement of the Bank of Japan on monetary policy had little influence on the mood of traders. The All Industries Activity index declined by 0.1% in August which was in line with the forecast.
The Light sweet crude oil quotes rolled back under pressure of US dollar appreciation and due to the recent crude oil inventories report which showed an increase of 4.6 million barrels in the US against the forecasted growth of 2.8 million barrels. Production levels also returned to levels seen before the hurricanes hit the American oil rigs. The OPEC meeting will be held tomorrow where oil production cuts will be discussed between most OPEC members and some other major oil producing countries, including Russia. News from this meeting may significantly influence the mood of traders.
The EUR/USD quotes were not able to break through the inclined support line and returned to the resistance at 1.1925 due to profit taking after the strong descending movement. In case of further growth, the nearest targets will be 1.2000 and 1.2070. On the other hand, fixing under the inclined support line may lead to continued drops with potential targets at 1.1700 and 1.1620.
The USD/JPY has stopped growing after touching the inclined resistance line. In case of growth resuming along this line, the next targets will be 113.00 and 114.70. In case of a downward correction, the price may fall to 111.00 and breaking through that may become a signal to sell with potential goals at 110.30 and 109.60.
The American crude oil benchmark, WTI, is falling after testing the 51.00 mark. In case of a decline below the 50.00 mark we are likely to see further drops with the potential to hit 48.50 and even 47.75. The RSI on the 15-minute chart rebounded from the oversold zone which in turn indicates that the descending movement is not yet exhausted. The immediate target in case of growth resuming will be 52.00.