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Key Insights
- Fed Chair Jerome Powell made a key speech ahead of the Fed decision, which will be announced in early November.
- Powell noted that current monetary policy was not extremely restrictive and that economy remained in a decent shape.
- Powell remains focused on inflationary risks.
U.S. Dollar
U.S. Dollar Index rebounded from the 106 level as traders reacted to Powell’s speech. Powell noted that the economy could enter into an inflationary period, but the outlook remained highly uncertain.
In case U.S. Dollar Index climbs back above the 106.50 level, it will head towards the nearest resistance at 106.90 – 107.20.
EUR/USD
EUR/USD pulled back as traders focused on Powell’s comments. The yield of 30-year Treasuries climbed above 5.08%, so bond traders believe that rates will stay high for many months.
It should be noted that EUR/USD has recently received strong support in the 1.0520 – 1.0550 range, so it will need significant catalysts to gain additional downside momentum.
GBP/USD
GBP/USD tested resistance at 1.2180 – 1.2200 but moved back below 1.2150 as Powell was more hawkish than expected.
If GBP/USD settles below the recent lows at 1.2090, it will head towards the nearest support at 1.2000 – 1.2030.
USD/CAD
USD/CAD is mostly flat in volatile trading. Geopolitical uncertainty provides some support to commodity-related currencies.
If USD/CAD stays above the 1.3700 level, it will head towards the next resistance at 1.3800 – 1.3830.
USD/JPY
USD/JPY is slowly moving towards the 150.00 level, but bulls are afraid of potential interventions from the BoJ.
Nothing has changed in recent days as market participants are waiting for BoJ moves.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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