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Dollar Treading Water Before FOMC Minutes as S&P 500 Corrects

Dollar Treading Water Before FOMC Minutes as S&P 500 Corrects

Ilya Spivak, Head Strategist, APAC

THE TAKEAWAY: The US Dollar is trading sideways as traders await the outcome of Wednesday’s FOMC minutes release while the S&P 500 has attempted a cautious recovery.

Don’t have access to the Dow Jones FXCM US Dollar Index? Try the USD basket via Mirror Trader as an alternative. **

US DOLLAR TECHNICAL ANALYSIS – Prices are treading water above support at 10650, the August 8 low. Near-term resistance is at 10708,the 23.6% Fibonacci expansion, with a break above that targeting the 38.2% level at 10744. Alternatively, a move below support eyes the bottom of a falling channel set from early July, now at 10598. Broadly speaking, the standstill likely reflects traders’ unwillingness to commit to a directional bias ahead of Wednesday’s FOMC minutes publication.

Forex_Dollar_Treading_Water_Before_FOMC_Minutes_as_SP_500_Corrects_body_Picture_5.png, Dollar Treading Water Before FOMC Minutes as S&P 500 Corrects

Daily Chart - Created Using FXCM Marketscope 2.0

** The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.

S&P 500 TECHNICAL ANALYSIS – Prices declined as expected after putting in a Hanging Man candlestick. The index is now retesting support-turned-resistance at 1652.10, the 38.2% Fibonacci retracement, with a break back above this barrier exposing the 23.6% retracement at 1674.10. Alternative, renewed downward momentum sees the next downside objective is at 1634.30, the 50% level.

Forex_Dollar_Treading_Water_Before_FOMC_Minutes_as_SP_500_Corrects_body_Picture_6.png, Dollar Treading Water Before FOMC Minutes as S&P 500 Corrects

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS Prices put in a bearish Dark Cloud Cover candlestick pattern below resistance at 1376.28, the 61.8% Fibonacci expansion, hinting a reversal lower may be ahead. Negative RSI divergence bolsters the case for a downside scenario. Near-term support is at 1356.22, the 50% Fib, with a break beneath that targeting the 38.2% level at 1336.76. Alternatively, a reversal above 1376.28 aims for the 76.4% expansion at 1400.72.

Forex_Dollar_Treading_Water_Before_FOMC_Minutes_as_SP_500_Corrects_body_Picture_7.png, Dollar Treading Water Before FOMC Minutes as S&P 500 Corrects

Daily Chart - Created Using FXCM Marketscope 2.0

CRUDE OIL TECHNICAL ANALYSIS Prices pulled back after putting in a Bearish Engulfing candlestick pattern below resistance at the top of a Triangle chart pattern, a barrier reinforced by the 38.2% Fibonacci expansion at 108.40. Sellers are now testing Triangle support at 104.71, with a break beneath that initially exposing the 38.2% Fib retracement at 102.70. Alternatively, a reversal above 108.40 aims for the 50% expansion at 110.32. On balance, a Triangle is typically indicative of trend continuation, which in this case carries bullish implications, though confirmation is absent for now.

Forex_Dollar_Treading_Water_Before_FOMC_Minutes_as_SP_500_Corrects_body_Picture_8.png, Dollar Treading Water Before FOMC Minutes as S&P 500 Corrects

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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