US dollar falls against key currencies ahead of FOMC decision

The British pound wavered today as traders reacted to the mixed jobs data. According to the Office of National Statistics (ONS), the country’s unemployment rate rose from 4.8% to 4.9% in October, a smaller increase than what analysts were expecting. At the same time, the average earnings index ex-bonus rose by 2.8%, better-than-the expected 2.2%. Similarly, with the bonus, the earnings index rose by 2.7%. However, the number of redundancies continued to increase as more companies continued to struggle. Traders were also watching the ongoing deliberations on Brexit.

The Swiss franc was unchanged today as traders reacted to the latest forecast by the State Secretariat for Economic Affairs (SECO). In their report, they predicted that the economy will contract by 3.3% this year and then bounce back by 3% in 2021. In the previous estimate, the bureau was expecting the economy to contract by 3.8%. Further, they expect the unemployment rate to rise from 3.2% in 2020 to 3.3%. Further data from Switzerland showed that the producer price index declined by 0.1% in November leading to an annualised decline of 2.7%. 

The US dollar declined against most peers as the market started to focus on the Federal Reserve. The bank’s Federal Open Market Commission (FOMC) will start its meeting today and deliver its final rate decision tomorrow. Economists don’t expect significant changes in the bank’s decision. They expect it to leave interest rates and quantitative easing policies unchanged. Also, they will continue to press policymakers to provide more financial support to the economy.

USD/CHF

The USD/CHF pair is trading at 0.8862, which is in the same range it has been in the past few days. The pair is along the lower side of the envelopes indicator. It is also slightly below the 25-day exponential moving average while the average true range (ATR) has continued to drop. Therefore, at this point, the path of the least resistance for the pair is lower, with the next target being the support at 0.8800.

EUR/USD

The EUR/USD has little changed today ahead of the Fed interest rate decision. On the hourly chart, the price is slightly above the 25-period and 15-period exponential moving averages. It is also slightly below the important resistance level of 1.2177. The average directional movement index, which is an important measure strength of the rally, is also falling while the RSI has risen to 58. Therefore, the pair will possibly continue rising as bulls aim for the next resistance at 1.2177.

GBP/USD

The GBP/USD pair rose to an intraday high of 1.3358 after the UK jobs numbers. On the four-hour chart, the pair is along the 25-period and 15-period moving averages. It is also above the gap that formed yesterday. Further, the signal and main line of the MACD is about to move above the important neutral level. The pair will possibly remain at the current level ahead of the Fed decision and UK inflation data.