THE FOMC STATEMENT IS LIKELY TO TRIGGER VOLATILITY
The EUR/USD price was not able to switch the current negative trend to positive. Support for the euro came from the Eurozone industrial production report which showed an increase of 0.2% compared to the forecasted zero change. We should also note that employment has grown by 0.4% in the third quarter. The main attention of the market today will be focused on the FOMC statement on monetary policy at 19.00 GMT and the last press-conference by Janet Yellen following the meeting as head of the regulator at 19:30 GMT. It is highly anticipated that interest rates will be increased today, but the main attention will be turned to the rhetoric concerning the future plans on monetary tightening in the US for 2018. Hawkish views among the FOMC members will likely result in further price declines for the pair.
The UK pound is rising cautiously today amid controversial labour data in the UK. Pound bulls have been cheered by the increase of average earnings on 3-month basis to 2.5% in October versus the 2.3% in the previous period. Negative news came in the form of unemployment which increased in October by 0.1% to 4.3%.
The USD/JPY corrected today ahead of the Fed’s statement and some support for the Japanese yen was provided by positive news on core machinery orders that increased by 5.0% in October, which is 1.9% more than forecasted. Tomorrow, some influence on the course of trading may come from the release of the industrial production report in Japan for October.
The common currency is consolidating and the amplitude of price fluctuations is falling which may signal a rise in volatility soon. In case of the price fixing under the support at 1.1730, the nearest targets will be at 1.1620 and 1.1550. On the other hand, fixing above the local high near 1.1760 may become the basis for the price to increase with potential target at 1.1825.
The GBP/USD rebounded from the inclined support line and as a result may continue the upward movement to the nearest resistance at 1.3400, overcoming of which is likely to lead to the price increasing up to the 1.3550-1.3600 range. On the other side, breaking through 1.3300 and fixing below it may be a confirmation of the sell signal with potential targets at 1.3250 and 1.3150.
The USD/JPY keeps moving along the inclined ascending support line. The price fixing under this line and the 1.1300 support may become a signal to sell, with the potential of falling to 111.70 and 111.00. Potential increases today will be limited by the resistance at 114.00. Volatility levels are likely to rise tonight after the Fed’s statement.