AUD/USD: 0.8860EUR/USD: 1.2740The dollar is weaker across the board ahead of the FOMC announcement later today after the Durable Goods badly missed expectations. It looks like being rather a non event until then with little data due from either Asia or Europe. There may be limited activity in the Kiwi on the release of the Business Confidence but the focus will be on the Fed and whether, or not, rates will remain on hold for a "considerable time".
The dollar is generally weaker ahead of the FOMC meeting, later today, after the Durable Goods orders severely disappointed the market, dropping by -1.3% versus expectation of 0.3% growth in September. The losses would have been worse had it not been for the Consumer Confidence data which came in far above expectations (87.0), at 94.5.
The action is now likely to be rather limited as the focus turns to what the Fed will have to say after today’s meeting, with the focus being on whether the statement will hint at any timing of the first rate hike, and whether the phrase “considerable time ” will be dropped from the wording. If the Fed remains dovish in its outlook and the phrase remains in place, then look for the dollar to come under further pressure.
The topside has so far seen a run up to 1.2765, a break of which would then head on to 1.2780 (minor), 1.2800 and then to the 21 Oct high at 1.2841. Above there would head back to the 15 Oct high at 1.2885 although at this stage this looks over the horizon, but an overly dovish Fed could see the Euro head back towards 1.3000.
The downside will again see Euro bids at 1.2715 (200 HMA) and at 1.2700, below which would head to the 100 HMA at 1.2675. It would seem that the FOMC statement is going to need to be rather hawkish for the dollar to head higher and put pressure on the Euro, which the current data does not really support, but below here, the Euro would head to the Fibo level at 1.2645 (61.8% of 1.2501/1.2885) and then to Friday’s 1.2634 low. Below this would see return to the Thursday session low 1.2613, below which the Euro would head on to 1.2600 with further bids to be seen at 1.2590 (76.5%) and at the minor low at the minor 7 Oct low at 1.2580. Once that gives way though, there is little to stop the Euro heading back to 1.2500 although that is now looking rather distant.
Until then sitting on hands looks to be the plan. A good day to catch up on admin!
Economic data highlights will include:
FOMC/Fed I/R Decision, Statement..
Jim LanglandsFX Charts www.fxchartsdaily.com
