S&P 500 Falls amid News from the Fed

Yesterday was an important evening that had an impact on many financial markets. The Federal Reserve (as expected) kept the rate at the same level. According to Powell:

→ The full effect of tightening the monetary policy has yet to be felt.
→ [They] will continue to act cautiously, basing further decisions on incoming statistical data.
→ Inflation is much higher than the target.

Will the Fed tighten monetary policy further? Opinions are divided. JP Morgan analysts believe that the rate hike cycle is over. On the contrary, Vanguard analysts believe that rates will have to be raised again (and even more than once).

Perhaps the Fed's repeated rhetoric no longer looks like a sign of confidence? One way or another, the US stock market fell sharply, making the recession scenario more pressing.

On September 19, we wrote that the market was under bearish pressure ahead of the FOMC meeting. The graph shows that they managed to realize their advantage.

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Central Bank Week Shakes Up Gold Market

Yesterday, the main event of the week took place — the Federal Reserve meeting, which had a noticeable impact on the market of assets denominated in US dollars. But besides the Fed meeting, there are a number of other events this week related to central banks:

→ today at 10:30, a meeting of the Swiss National Bank took place. The interest rate remained at 1.75%, although there was a significant possibility of its increase to 2%.
→ today at 14:00 GMT+3, a decision on the Bank of England interest rate is expected;
→ news from the Central Bank of Japan is planned for tomorrow morning — there may be surprises.

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AUD/USD and NZD/USD Could Start Fresh Increase

AUD/USD declined below 0.6430 before it found support. NZD/USD is now recovering and eyeing an upside break above the 0.5950 resistance zone.

Important Takeaways for AUD/USD and NZD/USD Analysis Today

• The Aussie Dollar started a fresh decline from well above the 0.6450 level against the US Dollar.

• There is a key rising channel forming with resistance near 0.6450 on the hourly chart of AUD/USD at FXOpen.

• NZD/USD is attempting a recovery wave above the 0.5920 resistance.

• There is a major contracting triangle forming with resistance near 0.5940 on the hourly chart of NZD/USD at FXOpen.

AUD/USD Technical Analysis

On the hourly chart of AUD/USD at FXOpen, the pair recovered above the 0.6450 resistance. However, the Aussie Dollar failed to clear 0.6500 and started a fresh decline against the US Dollar.

The pair declined below the 0.6450 support. It even settled below 0.6430 and the 50-hour simple moving average. Finally, the bulls appeared near the 0.6385 zone. A low was formed near 0.6385 and the pair is now correcting losses.

There was a move above the 23.6% Fib retracement level of the downward move from the 0.6511 swing high to the 0.6385 low. On the upside, an immediate resistance is near the 50-hour simple moving average at 0.6430.

The first major resistance is near a rising channel at 0.6450. It coincides with the 50% Fib retracement level of the downward move from the 0.6511 swing high to the 0.6385 low.

A clear upside break above 0.6450 could send the pair toward 0.6510. The next major resistance on the AUD/USD chart is near 0.6540, above which the price could rise toward 0.6585. Any more gains might send the pair toward 0.6600.

On the downside, initial support is near the channel trend line at 0.6415. The next support could be 0.6385. Any more losses might send the pair toward 0.6350.

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Market Analysis: EUR/USD, GBP/USD, and USD/JPY

At the US Federal Reserve meeting, officials expectedly kept the interest rate at 5.25–5.50%. According to the head of the regulator, Jerome Powell, tightening monetary policy is still possible if indicators begin to show negative dynamics again. At the same time, the US Federal Reserve aims to implement a program of gradually reducing the rate to 2.90% by 2026. Officials also intend to begin the gradual sale of bonds from their balance sheet, which are currently being purchased in the amount of USD 95.0 billion, of which USD 60.0 billion are government bonds, and another USD 35.0 billion are mortgage debt securities.

EUR/USD

The euro fell on Thursday but recovered slightly at the start of today's session. The US dollar weakened a day after the Federal Reserve signalled that US monetary policy would remain accommodative even longer. The Fed kept interest rates on hold Wednesday, in line with market expectations, but signalling that its officials are increasingly confident that aggressive policies can succeed in reducing inflation without crushing the economy or leading to large job losses. Along with another possible rate hike this year, the Fed's updated forecasts show significantly tighter rates through 2024 than previously expected. The US dollar index, which measures the currency against a basket of peers, was down 0.10% at 105.33 after rising to 105.74, its highest level since March. The immediate resistance of the EUR/USD pair can be seen at 1.0663, a breakout to the upside could trigger a rise towards 1.0702. On the downside, immediate support is seen at 1.0616, a break below could take the pair towards the 1.0584 direction.

At the lows of the week, a new downward channel has formed. Now, the price has moved away from the lower border of the channel and may continue to rise.

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Watch FXOpen's 18 - 22 September Weekly Market Wrap Video

Weekly Market Wrap With Gary Thomson: UK STOCK MARKET RISES, S&P 500 FALLS, OIL ANALYSIS, EUR/GBP

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• UK stock market rises amid inflation news #UKStockMarket #UKinflation

• S&P 500 falls amid news from the Fed S&P500 #Fed

• Oil analysis: Finally, a bearish reversal? #Oil

• Will stagflation persist in the UK? EUR/GBP volatility may be an indicator #EURGBP #stagflation

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Economic calendar: NASDAQ 100 May Keep Falling, High Volatility in Oil Markets, Potential Appreciation of the US Dollar

The US, Japan and the UK may have kept interest rates on hold last week, but with the Federal Reserve indicating that rates will stay higher for longer, there is turmoil in the equity markets. The NASDAQ 100 fell 500 points last week, and with weakness continuing into this morning's trading session, the volatility looks like it will continue throughout the week.

US durable goods orders (15:30 Wednesday) is the first meaningful economic release of the week. After a terrible -5.2% in July, analysts are expecting a modest decline of -0.4% for August. The final reading of US Q2 GDP is expected to show an increase to 2.2% when it is released on Thursday (15:30), as the US economy continues to tick over at a steady rate. This could give the US dollar a further boost.

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US Dollar On the Rise Despite Weak PMI Data

EUR/USD

The euro fell against the US dollar on Friday as economic data showed a contraction in economic activity, which could prompt European Central Bank hawks to soften their policy stance. Preliminary data indicates a contraction in economic activity in the eurozone's two largest economies, France and Germany. France's HCOB purchasing managers' index (PMI) for the services sector fell to a 34-month low in September, well below forecast, while Germany's PMI rose to 46.2 but below economists' forecast of 47.2. With inflation still high in the eurozone and at risk of rising, the ECB's next move could be to raise rates before rate cuts are on the agenda, several policymakers said on Thursday. The immediate resistance can be seen at 1.0663, a breakout to the upside could trigger a rise towards 1.0702. Immediate support is seen at 1.0623, a break below could take the pair towards 1.0579.

The previous ascending channel remains. Now, the price is in the middle of the channel and can continue its horizontal movement.

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USD/JPY Analysis: For the First Time This Year, the Rate Exceeds 149 Yen Per Dollar

The reason for the stable trend, as we have repeatedly pointed out, is the difference in the monetary policy of the USA and Japan. Inflation in Japan has been above 2% for more than a year, and the media are increasingly publishing expert opinions that the Bank of Japan will raise short-term interest rates from the current -0.1% at the end of this year. However, today Reuters published the opinion of Mr. Makoto Sakurai, the former head of the Bank of Japan. According to him:

→ the Bank of Japan may delay ending negative interest rates until around April next year;
→ the abolition of negative rates, which have been in place since 2016, will not harm the economy;
→ uncertainty about the economic prospects of the United States and China also gives the Bank of Japan a reason to delay raising rates, Sakurai added.

That is, the existing gap in monetary policy may continue for another six months, which will push the USD/JPY rate higher and higher. And it is not surprising that, as the chart shows, today the rate exceeded 149 yen per US dollar for the first time in a year, further increasing the likelihood of reaching the psychological level of 150 yen.

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The Yen and European Currencies Headed to New Lows

The main currency pairs began the last five-day trading period of September with a new wave of growth for the American currency. Changes in the Fed's point forecast for next year provided powerful support to the dollar, which, in turn, contributed to the search for the bottom in the euro, yen and pound.

The GBP/USD currency pair is testing support at a significant level of 1.2200, the EUR/USD pair is heading towards the January extremes of this year, and the USD/JPY pair has resumed growth in the direction of 150. Apparently, in the coming trading sessions, we can expect another upward impulse on the greenback. At the same time, we must take into account that these pairs are very close to important ranges, the test of which may end in a corrective rollback or reversal.

GBP/USD

The pound turned out to be quite susceptible to the outcome of the recent Bank of England meeting. The regulator left the rate at the same level, while analysts predicted a rate increase of another 0.25%. Add to this a number of weak macroeconomic indicators from the UK, published last week, and we get a stable downward trend for GBP. The price has already dropped below 1.2200, and since there are no reversal combinations, a test of 1.2100-1.2000 may happen.
From the fundamental analysis point of view, today, we are waiting for data on the number of building permits issued in the United States. The US Consumer Confidence Index for September will also be published (17:00 GMT+3).

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EUR/USD Takes Hit While USD/CHF Surges

EUR/USD started a fresh decline below the 1.0615 support. USD/CHF is rising and might aim a move toward the 0.9220 resistance.

Important Takeaways for EUR/USD and USD/CHF Analysis Today

• The Euro struggled to clear the 1.0670 resistance and declined against the US Dollar.

• There is a major bearish trend line forming with resistance near 1.0585 on the hourly chart of EUR/USD at FXOpen.

• USD/CHF is gaining pace above the 0.9135 resistance zone.

• There is a key bullish trend line forming with support near 0.9150 on the hourly chart at FXOpen.

EUR/USD Technical Analysis

On the hourly chart of EUR/USD at FXOpen, the pair failed to clear the 1.0670 resistance. The Euro started a fresh decline below the 1.0615 support against the US Dollar, as mentioned in the previous analysis.

There was a move below the 50-hour simple moving average and 1.0600. The bears were able to push the pair below the 1.0585 pivot level. The pair traded as low as 1.0556 and is currently showing a lot of bearish signs.

Immediate resistance on the upside is near the 23.6% Fib retracement level of the downward move from the 1.0671 swing high to the 1.0556 low. There is also a major bearish trend line forming with resistance near 1.0585 and the 50-hour simple moving average.

The first major resistance is near the 50% Fib retracement level of the downward move from the 1.0671 swing high to the 1.0556 low at 1.0615. An upside break above the 1.0615 level might send the pair toward the 1.0670 resistance. Any more gains might open the doors for a move toward the 1.0720 level.

On the downside, immediate support on the EUR/USD chart is seen near 1.0555. The next major support is near the 1.0540 level. A downside break below the 1.0540 support could send the pair toward the 1.0500 level.

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Oil Surges to a New High of the Year

As the chart shows, the day before yesterday, a barrel of WTI cost USD 87.87, but this morning, the price exceeded the level of USD 93. That is, the growth was more than 6% in just 2 days.

The main driver of such growth remains the voluntary reduction in oil production by OPEC+ countries. Added to this was the market's reaction to yesterday's news about the reduction in oil reserves in the United States (expected = -0.7 million barrels, actual = -2.2 million). Inventories are approaching historical lows, according to Reuters. Probably, the US authorities, by releasing oil from storage, are trying to reduce the impact of its high price on inflation, but the graph shows that these efforts are unlikely to give the desired result.

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Bitcoin Cash Analysis: Promising Resistance Breakout

Yesterday, the head of the SEC regulator, Gary Gensler, answered questions for 4 hours before the Financial Services Committee of the US House of Representatives, which, among other things, related to cryptocurrencies.

What has become known:

→ on the eve of the hearing, Gary Gensler was sent a letter from four members of the US Congress demanding approval of applications for ETFs based on cryptocurrencies;
→ the head of the SEC avoided answering questions about the timing of decisions on these applications, although he noted that if the agency’s work was stopped on October 1 (like other government agencies), this would slow down the process;
→ for participants in the cryptocurrency market, the event could have given a positive impetus if Gensler’s words had contained hints of positivity, but he once again spoke out about the dangerous prohibited practices that crypto firms use.

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