Today, we dove into a few charts ahead of today’s FOMC meeting, where the Fed is expected to raise rates, but will be the new Fed Chairman’s (Powell) first press conference; it could bring some volatility. Dollar pairs, crosses, gold, S&P 500 in focus.
Technical Highlights:
- US Dollar Index (DXY) limping higher, looking increasingly like a correction
- Gold continues to find support near 1300, wedge forming; long-term trend-line an issue
- S&P 500 higher-low soon or another swoon?
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US Dollar Index (DXY) limping higher, looking increasingly like a correction
The generally favorable outlook we held for the past couple of weeks for the US dollar is beginning to deteriorate as price action looks increasingly corrective in nature. The US Dollar Index (DXY) is ever so sluggishly working its way higher, with the underside 2015 trend-line continuing to act as a ceiling.
There is still the possibility of popping through, but will quickly face the trend-line from a year ago right around 91, where the September low also lies. The index would need to accelerate through both of the aforementioned levels to garner momentum. An undercut of the most recent swing-low at 89.43 should have the ball rolling back downhill.
Today may or may not be the catalyst for either scenario, but one way or another it doesn’t look like it will be too long before we have a resolution. To listen in on live coverage of today's FOMC announcement, join Chief Currency Strategist, John Kicklighter, at 17:45 GMT time.
US Dollar Index (DXY) Daily Chart (looking corrective)
EUR/USD, accounting for ~57% of the DXY, would then of course act opposite of the dollar-based index. There is good support not far below at the April trend-line to start with, down to just under 12100 should it sink so far. The choppy price action since late January is beginning to increasingly resemble a bull-flag pattern.
To see how current trader positioning in various currencies and markets can help forecast their direction, check out the IG Client Sentiment page.
EUR/USD Daily Chart
We also checked in on USD/JPY, GBP/USD, USD/CHF, NZD/USD, AUD/USD, USD/CAD, AUD/JPY, EUR/NZD, GBP/NZD, AUD/NZD, USD/MXN, and USD/CNH…
Gold continues to find support near 1300, wedge forming; long-term trend-line an issue
Gold continues to find support in the 1307/02 area, making it increasingly important to hold if it is to rally. A break below would likely have it taking out 1300 with relative ease given how many times we’ve seen the levels just above hold.
On a break above the top-side trend-line of a developing descending wedge, it won’t be long before the precious metal runs into trouble again. The 2013 trend-line remains a big focus of ours for keeping the outlook for gold neutral at best. A weekly close above needed to clear the way for higher levels.
Gold Daily Chart (Holding support)
S&P 500 higher-low low soon or another swoon?
The S&P 500 is entering a point in time where it needs to start holding or runs the risk of rolling over and cementing a significant lower-high. If the current slide doesn’t soon firm up, putting in a materially higher low relative to the March 2 low, then selling could begin to intensify as the market loses confidence.
A higher-low scenario still keeps the prospect in play for a new record high. Keep sliding, taking out 2647, and a test of the Feb 2016 trend-line and 200-day may not provide the same kind of sponsorship it did in February.
S&P 500 Daily Chart (Nearing an important point in time)
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---Written by Paul Robinson, Market Analyst
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