Daily Market Analysis from ForexMart

[Andrea ForexMart]

The issue about the next cut rate of the BoE resulted the pound to hover within the pressured area. According to BoE, the cut rate will aid the improvement of the country's economy.

The sterling and dollar recorded a negative balance on Friday. Bearish investors were able to steer the market. GPB/USD had lose its winning track and crossed the 1.3200 level and hit the level of 1.3100 during the closed out trade. The pair as presented in the 4-hour lies below the 50, 100 and 200 EMAs. The overall direction moving averages 50, 100 and 200 are descending.

The resistance of the pair is 1.3100,the support is identified at 1.3000. MACD indicated a negative downtrend and remained at its current level which affirmed the seller's strength. RSI represented an oversold condition.

[Andrea ForexMart]

The USD/JPY traded at 101.866, dropping by 0.390 points or -0.38% as traders and investors are preparing for the announcements of the Federal Reserve and Bank of Japan regarding their respective monetary policies on Wednesday.

Although the Federal Reserve’s announcement on its interest rate policies will be announced in the same period as that of BoJ’s announcement, analysts are speculating that the BoJ’s announcement on its monetary policies will have a greater impact on the market’s volatility and movement than that of the Fed’s announcement. However, this announcement might give cues regarding an imminent interest rate hike in December, which can strengthen the USD and cause the JPY to lose some of its value.

The Bank of Japan is also expected to discuss an extensive review of its monetary policy framework, which includes a combination of its asset-buying program with its negative interest rates.

Speculators are having difficulties with regards to predicting the BoJ’s movement. Some speculators are saying that the Japanese central bank will be changing its mechanism in exchange of a policy which will be combining an increased stimulus while giving protection to banks which are struggling with dealing with the negative effects of interest rates on their respective deposits.

[Andrea ForexMart]

The USD/JPY pair went down by 0.169 0r -0.17% to trade at 101.744 points. The US dollar is currently in a tight trading range against the JPY during the last trading session as various market players are waiting for the Bank of Japan’s announcement regarding its monetary policies, as well as the Federal Reserve’s announcement on Tuesday.

The USD/JPY slightly weakened after the release of the US housing data, which turned out to be a disappointment for traders and investors. The housing data came out at a yearly rate of 1.14 million units last August, going way below the expected range of 1.19 million units. Construction permits also dropped by 0.4% to go down at 1.14 million units in August.

Speculators are saying that the Bank of Japan would have to implement programs with significant monetary policy easing and interest rate cuts in order to further weaken the JPY in the long-term frame. The Federal Reserve must also release a hawkish statement which can indicate a possible rate hike in December. The USD/JPY is also expected to appreciate especially if the BoJ releases a more aggressive monetary strategy combined with an expected 12% interest rate raise by the Fed prior to the central bank’s announcement. However, if the Fed remains cautious on its policies and refuses to raise its rates, then the USD might weaken and the BoJ would be unable to decrease the value of the Japanese currency.

[Andrea ForexMart]

Yesterday, Governor Poloz of the Bank of Canada discussed about the need of the monetary stimulus for the country in order to bolster its economy, however the US and Canadian dollar seems impassive as it performed a steady-going movement.

As it was stated in the yesterday's forecast, the USDCAD traded within a high range near the 200 SMA and possibly to become a firm resistance for the pair and the forecast were already proven right. Buyers attempted to drove the price beyond the resistance level which resulted a fall back to its previous range.

The 200 SMA breaks through the 1.3253, the high is positioned around the 1.3242. Due to a sharp decline of the high, the price settled down at 1.3176 and further changes down to 1.3100 is still anticipated. Moreover, the FOMC announcement will determine if the pair could make an increase within the level of 1.2850.

The USD and CAD appeared to be bearish within a short and medium term. There is also a prediction regarding the oil prices consolidation subsequent to the recession happened few months ago. Part of the forecast is the continuous ranging of the pair between 400-500 daily pip range.

[Andrea ForexMart]

The activity of GBPUSD yesterday resulted the pair to be considered as volatile currency pair in the market.The pound and dollar trades in a tight range with a firm support set in the level of 1.2950. The resistance level maintained 1.3000 even after the Fed announcement regarding the retain the price of current rates, however, they did not issued a specific date for the rate hike.

The vague announcement from Fed rendered an uncertain state of volatility and subsequent to this statement, other pair related to USD have been affected also. The concerned pairs concluded a moderate upward trend followed by the GBPUSD as well.

The USD established a weak position because the market were a little disappointed since Fed did not presented anything hawkish. The pair fluctuated with a resistance level of 1.300 but the movement continued on an advanced level of 1.3035.
In view of the instability of the USD that is expected to prevail until the succeeding session but with a conforming and secure target ranges from 1.3140 to 1.3170.

[Andrea ForexMart]

The much-awaited monetary policy announcements from the Bank of Japan and the Federal Reserve turned out to be a big disappointment for investors and traders, particularly to dollar bulls, since both central banks have decided to maintain their present policies and make no changes. The US Federal Reserve did not make any changes in its interest rates. However, there is a possibility that a rate hike could happen within the year due to three dissenters at this point compared to only one dissenter during the last policy announcement. Fed chair Janet Yellen has also stated that the possibility of a rate hike has already strengthened.

The Bank of Japan has created measures to take control of its yield curve, such as maintaining its rates at -0.1% in an attempt to protect banks. However, the BoJ has also introduced a 10-year interest rate target. Policy makers are now anticipating one last rate hike for 2016 and possibly two more hikes for 2017. The median growth protection for 2016 was cut back from 2% to 1.8%, indicating a decrease in its long-term forecast. Inflation rates are expected to go down to 1.3% during the last quarter from the previous forecast of 1.4%.

The EUR/USD pair went up to 1.1196 points before going down slightly prior to the announcement of the central banks, with the USD losing some of its present value. The EUR/USD also maintained its neutral-bearish stance in the 4-hour chart after certain technical indicators went over the neutral side. Prices were also unable to go over the 100 and 200 SMAs. However, the currency pair is expected to strengthen this Thursday due to the upward movement of the USD, with trading points expected to go up to 1.1200.

[Andrea ForexMart]

The EUR/USD persist an upward grind movement since the trading day yesterday. The said activity started subsequent to the FOMC's announcement.

Bearish investors tried to pass through the support level of 1.1145 but failed to accomplish their plan. When the announcement were already made, bullish investors are able to manage the price actions that moved in an ascending manner. They are capable to broke the yesterday's forecast with a level of 1.1250.

The European market look forward for the announcement of the ECB president, Mr. Mario Draghi regarding the Euro economy. This is why the economy had experienced a price delay in selling. Consequent to the major announcements made by the BoJ, Fed and other central banks, Draghi did not disclose any special information because he does not want to aggravate them.

After the grind and FOMC statement, the USD moderately increased and started to acquire strength together with the its related pairs. This development negatively affected the Euro and demonstrated a decreasing grind that last in one night.

The grind of EUR gained a support towards 1.1200. In case that the dollar stick on its actions, the EURUSD has the tendency to draw back a main support in the 1.1200 level.

[Andrea ForexMart]

The cable pair GBP/USD bounced back to trade at 1.3013 after dropping to its 1-month low at 1.2946 during Wednesday’s trading session. The cable pair then went down slightly at 1.2954 before finally rallying at 1.3046 after the Federal Reserve chose to maintain its previous interest rates.

The GBP/USD’s rally from July’s new low in 31 years at 1.2798 from its previous value of 1.3481 indicates that the downward trend is a mere temporary low. Meanwhile, the consecutive value swings suggest a possible triangle unfolding with a-leg terminus at 1.3481, a b-leg trough at 1.2865, and September’s highest increase at 1.3445 points pinpoints the c-leg terminus while the d-leg would go over 1.2865 points, inducing a final rebound at the e-leg before the downward trend reappears.

The rebound of the cable pair during the last trading session from its monthly low at 1.2946 indicates that the dropping trend will only be temporary since this particular drop was accompanied by bullish convergences on the 1-hour indicators and will likely gain further to trade at 1.3137 points next week, going over 1.3092 points.

[Andrea ForexMart]

Investors in the Japanese yen were disappointed with the Bank of Japan’s plans to reexamine its monetary policies. The reaction to the central bank’s announcement caused an initial double-sided volatility. Investors have since decided that this particular decision will have no bearing on the economy and on the Japanese currency.

The BoJ’s announcement caused the JPY to increase significantly on September 21, but the USD had already started bouncing back by September 23. The USD/JPY closed Friday’s trading session at 100.971 points, going up by 0.211 points or +0.21%. The pair however still closed the week lower by 1.26%.

The USD/JPY pair was also further weakened by the Fed’s interest rate and monetary policy statement, which turned out to be less hawkish than expected. The Federal Reserve did not increase its interest rates this month, but there is still a possibility of an interest rate hike in December.

The USD experienced a downward pressure.due to the Fed’s lowered expectations and the decreased possibility of future rate hikes, which can lead to a lowered appreciation of the USD since the central bank’s decision indicates a slow-moving US economy.

[Andrea ForexMart]

The EUR/USD went up higher during Friday’s trading session as the USD further weakened after the Fed’s decision to maintain its current interest rates. The Markit PMI also went out lower than expected after it took the bulk of the earlier increases in the USD. Resistance levels are currently on the downward side after coming out within the 1.1290 range. Support levels are currently near the 10-day moving average at 1.1206 points.

US Markit PMI data dropped by 0.6 points to go out at 51.4 points for September following a 0.9 point drop to 52.0 points in August. Index is now ranging from 50.7-52.9 for 2016, with September’s levels going at 53.1 points. New index data showed a decrease to 51.0 points from last August’s 52.7 points, its lowest level since December 2015. Manufacturing data also went out lower than expected as compared to similar technical readings of composite EU data.