US dollar wavers after mild Fed interest rate decision
The US dollar wavered in overnight trading as traders reacted to the interest rate decision by the Federal Reserve. As was widely expected, the bank left interest rates unchanged in a range between 0 and 0.25%, where they have been for the past seven months. The bank also left its asset purchases program unchanged and committed to do more to support the economy. In a statement, Jerome Powell said that the economy had continued to recover but remained below pre-pandemic levels. Later today, the currency will react to nonfarm payroll numbers from the United States.
The Japanese yen was also little changed as traders reacted to household spending and wages data. According to Japan’s bureau of statistics, the country’s household spending rose by 3.8% in September, a significant improvement from the previous month’s 1.7%. It was also higher than the expected increase of 2.2%. On an annualised basis, spending fell by 10.2% because of the impacts of the pandemic. In the same month, overtime pay declined by 12% while average cash earnings fell by 0.9%.
The Canadian dollar eased slightly against the US dollar in overnight trading ahead of the Canadian jobs numbers. It also reacted to lower crude oil prices. Analysts expect the Canadian unemployment rate to fall from 9.0% to 8.8%. They also expect the participation rate to remain unchanged at 65.0% as the economy added more than 200k jobs. The currency will also react to the Canadian PMI numbers released by the Ivey institute.
The price of Brent crude oil dropped from a high of 41.60 to an intraday low of 40.29. On the hourly chart, the price has moved below the 61.8% Fibonacci retracement level. It is also along the lower line of the Bollinger bands. Similarly, the relative strength index has moved from the overbought level of 70 to the current 37. Therefore, the pair is likely to continue falling as bears aim for the next support at 39.95, which is along the 50% retracement.
The GBP/USD pair rose to an intraday high of 1.3182, which is the highest it has been since October 21. On the four-hour chart, the price has moved above the 25-day exponential moving average. It is slightly below the important resistance at 1.3165. Also, the awesome oscillator moving above the neutral level is a sign that bulls are prevailing. Today, the pair is likely to continue rising as bulls target the next resistance at 1.3200.
The EUR/USD pair is trading at 1.1830, which is slightly below yesterday’s high of 1.1860. On the four-hour chart, the price is above the 15-day and 25-day moving average. It has also moved above the 61.8% Fibonacci retracement level. It also seems to be forming a bullish flag pattern. That means that the pair is likely to continue rising as bulls target the next resistance at 1.1900.