FOREX Fundamental analysis on September 21, 2022
Christine Lagarde's statement on further ECB rate hikes had no impact on the dynamics of foreign exchange assets. Investors are keeping an eye on the Fed and the main question today is how far the regulator will step - by 75 or 100 basis points?
The main scenario with 80% probability is a 0.75% rate hike. However, the latest inflation report may force the Fed to be more aggressive with its monetary tightening, although it is certainly not enough for a fruitful analysis, and the burden on the economy would be much higher with such a decision.
In this regard, not only the FOMC's interest rate ruling, but also various economic forecasts are of great interest. In particular, the unemployment forecast.
In addition, the Fed will analyze the neutral rate positioning.
As for the European currency, the lack of high quality bonds to bail it out has added to the old problems. Unlike in the United States, only a few countries' bonds are safe-haven assets in the Eurozone. Thus, if demand for German securities outstrips supply, Italian bonds are dumped at any price.
Of course, the 75 basis points from the Fed are already factored into prices, so we may see the dollar selling on the facts today. But, in any case, the upward pullback in EUR/USD will not be very long. Our forex trading strategies will use the rise in the asset for new sales at a better price until the pair consolidates above parity.
On Wednesday, USD/JPY buyers turned active and the pair broke through the resistance at 148.00.Despite the low market volatility, caused by expectations of the results of the Fed meeting, the "bulls" managed to update the local maximum and are not going to give up their positions.Investors believe that at today's meeting the Fed will keep the rate at the same level of 5.5%, but will make it clear that with a new round of inflation caused by rising oil prices, the regulator will continue to tighten monetary policy and in November may raise the rate by 25 basis points to 5.75%.Japan's macroeconomic statistics, published on Tuesday, failed to have a significant impact on the yen dynamics. In August, exports decreased by 0.8% and imports by 17.8%. Japan's trade deficit for the month rose from ¥66.3 billion to ¥930.5 billion.On Friday, the Bank of Japan will hold a meeting. It is possible that the regulator will change the current course of monetary policy, especially as USD/JPY is confidently approaching 150.00, and inflation has not yet approached the 2% target.USD/JPY Technical AnalysisOn the chart of the day, the Bollinger Band Indicator remains in an upward direction. At the same time, the MACD Indicator is declining in a positive range and has formed a weak sell signal, which may be canceled soon. The Stochastic oscillator is flat in the overbought range.In case of price consolidation above the key resistance at 148.00, we open long positions with the expectation of reaching the target at 149.00. Stop-loss is set at 147.36.It makes sense to consider selling only if the pair falls below 147.36. In this case, the nearest target of the "bears" is at 146.00. Stop-loss of the deal is placed at 148.00. 
FOREX Fundamental Analysis for EUR/USD on September 20The Fed is unlikely to raise the rate at today's meeting, but it will probably keep the forecast of monetary restriction in November. Expectations that the federal funds rate will rise to 5.75% remains a long-term supportive factor for the dollar, which will prevent EUR/USD from staying above 1.07 for long.Oil is getting more expensive in the market and this could add strength to the new round of inflation. CPI is already reacting to rising energy costs, core inflation will not be long in coming, although it does not take into account the cost of the energy component. But, rising fuel costs are dragging up prices in all segments of the economy.Clearly, the oil market will not allow the Fed to put a stop to the cycle of tightening financial conditions. U.S. bond yields continue to storm to new highs, which confirms the market's faith in the Fed's hawkish monetary policy course.The background favors the greenback, which not unreasonably feels itself a full-fledged leader in forex currency trading. Of course, in six months to a year, China's economic recovery will help revitalize the euro. But getting rid of the dollar now is not the best trading strategy. We will use every EUR/USD growth to enter sales.Today the Fed meeting may give a signal for realization of this forex trading strategy. Markets have no doubt that Jerome Powell will confirm the regulator's intention to raise the rate in 2023 to 5.75%.Moreover, if the Fed chief shows concern about the rising cost of oil and the subsequent round of inflation, investors may intensify dollar purchases in hopes of more aggressive actions of the Central Bank.Today the volatility of currency pairs should come out of its usual lull. We can consider risky purchases of EUR/USD if resistance at 1.0715 is broken. But it is better to use the growth of the pair for selling, as well as a break of support at 1.0650. 
USD/CAD trading idea from September 19, 2023At Tuesday's trading session, USD/CAD is developing the bearish momentum from September 8, moving away from the local high of 1.3700. Today the pair is testing the August 15 lows near 1.3460 for a breakdown.US debt bond yields fell 0.6% to 4.3% on Monday, preventing the dollar index from holding above ё105.00. The DXY slipped 0.25% yesterday.At the same time, the "Canadian" is supported by rising oil prices. Today WTI after the release of strong statistics from China, $91. In the Middle Kingdom, industrial production rose from 3.7% to 4.5% and retail sales rose from 2.5% to 4.6%. Consumption in China is recovering, which will increase the demand for oil. In addition, there is a significant increase in investment demand for commodities.Canada releases its inflation report today (12:30 GMT). According to forecasts, consumer prices are expected to rise from 3.3% to 3.8% (y/y) in August. If the actual values confirm expectations, the Bank of Canada will have to raise the interest rate again, which will be another argument in favor of strengthening the Canadian dollar.We consider the continuation of the downward movement on USD/CAD and place a sell order. Forex crosses with the Canadian dollar are also interestingSell-limit 1.3480take-profit 1.3200stop-loss 1.3580 
FOREX Fundamental Analysis for EUR/USD on September 19The EUR/USD downtrend continues, many negative factors have already been taken into account by prices, and targets for chart patterns have been worked out. Speculators are waiting for pullbacks to re-enter the trade. However, the situation is such that the collapse of the pair may continue without correction.Hedge funds for the first time since March became buyers of the dollar against all major world currencies, as well as against the Brazilian real and Mexican peso. The exclusivity of the U.S. economy and the Fed's policies have served the dollar well. But will the greenback have enough strength to send EUR/USD to the parity level?The divergence of economic growth between the US and the EU is one of the main trump cards of the dollar strengthening. The most negative scenario for the New World economy is a "soft" landing while the European economy is not getting out of stagflation. But on the eve of the recessions of 1990, 2001 and 2007, many analysts also envisioned a slight slowdown, which eventually turned into a major crisis.Inflation is hard to beat, and there are always risks of a new spike while each new act of monetary restraint reduces consumer demand and raises unemployment. The Fed's victory may prove temporary and the recession deep. In 2024, the dollar is unlikely to retain its leading position in forex currency trading. Expectations of dollar weakness could lead to a EUR/USD recovery in the fourth quarter, unless, of course, the Eurozone adds new problems.One of these could be duties on imports of European cars to China. Taking into account that Volkswagen sends 40% of its production to the Celestial Empire, Mercedes-Benz - 37%, and other concerns a little less, the customs barriers will be a strong blow to the economy of the Eurobloc.In addition, the EUR/USD "bears" are supported by rising oil prices. Brent is approaching the $100 mark and puts pressure on European importers. However, the Fed remains in tension, as the rise in energy costs may cause a new round of inflation. But in this case, the regulator will tighten financial conditions even more, which will again support the dollarThis week the Fed meeting will take place and with such ambiguous dynamics of EUR/USD it is best to stay out of the market until the regulator's decision. 
GBP/USD is trading in a narrow price range near 1.2375 on Tuesday. The volatility of currency pairs on the market is low, as the Fed and Bank of England meetings will be held this week.Investors do not expect the Fed to change the interest rate while the Bank of England may conduct an act of monetary restriction by 25 basis points and raise the rate to 5.5%, completing the cycle of tightening financial conditions. Prior to the publication of the results of the regulator's meeting in the UK, the inflation report will be released. The indicator is expected to rise by 0.7% (m/m) or from 6.8% to 7.1% (y/y) in August. At the same time, core inflation may slow from 6.9% to 6.8%. According to a recent survey, 40% of the population believe the Bank of England's policy of a sharp rate hike is wrong. This is the lowest amount of doubts about the regulator's actions since 1999.Tomorrow, the UK will release its retail price index. The index is expected to grow by 0.9%.Technical analysis for GBP/USDThe Bollinger indicator on the Daily remains in a steady decline, as does the MACD indicator, which maintains a strong sell signal. The Stochastic oscillator is flat in the area of minimum values.If the pair consolidates below the level of 1.2369, we continue to form short positions in the direction of 1.2240. Stop-loss is set at 1.2440.The transition to buying is possible only in case of price consolidation above the level of 1.2450. The nearest target for buyers will be 1.2550. Stop-loss is set at 1.2400. 
FOREX Fundamental Analysis on September 15, 2023The European Central Bank went for a rate hike to 4.0%, which was a collapse for the single currency. Investors decided that the regulator has ended the monetary restriction cycle while the Fed continues to keep the intrigue alive. EUR/USD moved into a sharp decline.Despite the fact that some members of the ECB Governing Council felt a pause was necessary, the rate was raised by a majority vote. Christine Lagarde notes that the tightening of financial conditions may continue, and there is no question of a rate cut. But markets think differently.The derivatives market believes that next year the ECB will cut the rate by 75 basis points, and the first act of monetary expansion will take place in June, not in July, as previously thought. It is clear that investors have assessed the deterioration of economic forecasts of the Eurozone and believe that in the Old World recession can begin much faster than in the New World, therefore, the regulator will have to go to the easing of monetary policy.Once again worked out the classic principle of currency trading on Forex: "buy on rumors, sell on facts". According to HSBC analysts, EUR/USD will fall to 1.02 by the end of the year.There is certainly logic in this reasoning. In any case, economic reports give an accurate assessment of the state of affairs in the U.S. and Eurozone. According to the forecast of JP Morgan, the US GDP will grow by 3.5% in the third quarter. This means that the Fed can afford to continue the monetary restriction cycle, unlike the ECB.EUR/USD continues its bearish hike. Forex trading strategies with selling the pair from upward pullbacks give a good result. We continue to build up short positions with a focus on 1.059 and 1.051. 
FOREX Fundamental Analysis on September 14, 2023The U.S. inflation report failed to revive forex trading, and now investors' attention has shifted to the European Central Bank meeting. Rumors appeared on the market that the Eurozone CPI forecast for 2024 is 3.0%, and immediately the probability of a rate hike to 4.0% at today's meeting of the regulator soared from 20% to 70%. Against such a backdrop, EUR/USD cannot continue to decline, no matter how much US inflation threatens the Fed.Actually, having seemed quite "hot" at first, due to the fact that CPI growth exceeded the forecast and reached 3.7% rather than 3.6%, in the end the report did not make a strong impression on investors, as core inflation slowed down in August, depriving the Fed of the justification for a rate hike.The probability of another act of monetary restraint in 2023 has fallen from 45% to 43%. US debt bond yields fell, stock indices strengthened and EUR/USD returned to the pivot level at 1.072.Now it's up to Christine Lagarde's team. It is expected that the ECB, despite the threat of recession, will be forced to raise the rate by 25 basis points to 4.0% due to an increase in the forecast of inflation expectations.Investors considered three options for further developments. The "basic" one, which was considered until yesterday, assumed the ECB pause without the regulator's refusal to raise rates further. The second option provided for an act of monetary restriction with a hint at the end of the cycle of tightening financial conditions. And the third - continuation of the "hawkish" course until a special decision of the ECB. It was the third option that became the master plan as of yesterday.The Fed and the ECB have swapped places. The Fed is leaning towards a cautious approach while the ECB is forced to act decisively. Against this background, investors ignored the weak Eurozone statistics and are preparing for EUR/USD to storm the level of 1.0765. But will the euro have enough arguments to continue its upward movement? 
Gold AnalysisOn Wednesday, XAU/USD continues to develop downward momentum and trades near 1910, testing the lows of August. However, investors are in no hurry to open new positions, preferring to wait for the release of the US inflation report (12:30 GMT).The main driver of the asset's decline is the strengthening of the dollar, which is supported by rising yields on US debt bonds and demand for protective assets. Rates on 10-year treasuries currently stand at 4.29%.Inflation is expected to accelerate from 3.2% to 3.6% in August while the core CPI is expected to decline from 4.7% to 4.3%. If the actual CPI values are higher than expected, the Fed will have to continue tightening financial conditions, and this will again support the dollar.At the same time, the markets do not expect a change in the Fed rate in September The probability of such a scenario is 93%. At the same time, it is assumed that at tomorrow's ECB meeting the rate will be raised by 25 basis points. Under such conditions, investors will more actively purchase government bonds, preferring them to gold.Market sentiment shows that 78% of traders are buying gold, expecting XAU/USD to rise. The market, as usual, will go against the crowd, bringing losses to traders to buyers, and XAU/USD may update local lows on the release.I consider placing a sell order on XAU/USDSell-limit 1925take-profit 1880stop-loss 1940