GBP/USD Trends Upwards While EUR/USD Remains Stuck In Consolidation Phase

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Dear Traders,

Monday was characterized by a weakening U.S. dollar which suffered a slight setback against its counterparts. The recent weakness can be attributed to uncertainty over the future monetary policy stance of the Federal Reserve. New York Fed President William Dudley plans to retire next year and with Dudley’s planned exit, the unfilled board seats create uncertainty over the Fed’s approach to policy in the coming year.

The EUR/USD extended its consolidative mode into the new week and traders are still struggling with false breakouts and limited price swings. ECB President Mario Draghi is scheduled to speak at the ECB Forum on Banking Supervision today at 9:00 UTC but these opening remarks might be not enough to free the euro from its lethargy. Technically speaking, we now wait for a break below 1.1570 to sell euros whereas on the topside, we expect potential gains to be limited until 1.1660 and 1.17 amidst subdued price action.

The best performer was the GBP/USD which rose towards 1.3180, providing buyers a good profit yesterday. The latest upward move is not surprising given the fact that the pound continues to oscillate within its range between 1.3340 and 1.30.

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All Eyes On The FOMC Decision Even Though No Changes Are Expected

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Dear Traders,

While the euro ended yesterday’s trading day virtually unchanged, the pound sterling headed for a test of 1.33 but reversed some of its gains just shy of that barrier. Whether we will see a sustained breakout above 1.33 remains to be seen and hinges on the risk appetite for pounds ahead of tomorrow’s BoE Super Thursday. The bank of England is widely expected to raise interest rates for the first time in a decade but this move is shrouded in suspicion. We will discuss the risk potential in tomorrow’s analysis.

Today’s focus will be on the Federal Reserve and the market’s appetite for U.S. dollars. It could thus be a turbulent trading day with traders bracing for higher volatility in all USD crosses.

The FOMC rate decision today at 18:00 UTC is top listing but the market is virtually certain that no change to the benchmark will be made this month. Economists expect policy makers to keep rates on hold for now and increase them at the December meeting. The probability of a December rate hike is at 83 percent. However, even if today’s Fed decision is unlikely to serve as a big market mover it could still surprise dollar bulls. In case of a less hawkish outcome, in other words, if there are a number of hawkish dissents, the dollar could give up some of its gains. Let us be surprised.

With regard to the U.S. tax reforms, the House Republicans are expected to release the tax bill text on Thursday.

We also have the ADP Report scheduled for release at 12:15 UTC followed by the ISM Manufacturing Index due at 14:00 UTC, so there is plenty of economic data that could affect the price action in the greenback today.

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We wish you good trades and many pips!

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Copyright © All Rights Reserved 2017 Maimar-FX.

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