Cable forms symmetrical triangle ahead of Fed decision
European stocks rose after the relatively strong earnings from some leading companies. In the United Kingdom, the FTSE 100 index rose by 0.20% after strong results by Lloyds Bank, the biggest mortgage lender in the country. The bank’s profits surged as it removed more than 459 million pounds from its provisions. In Germany, the DAX index rose by 0.35% after Deutsche Bank reported strong results. It made a profit of 908 million euros, the biggest increase since 2014. It also lifted its forward guidance. Later this week, European companies like AstraZeneca, Barclays, and NatWest, formerly known as Royal Bank of Scotland (RBS), will publish their results.
In the United States, futures tied to the Dow Jones and Nasdaq 100 index declined even after strong earnings by top companies. In a report yesterday, Alphabet said that its revenue surged by more than 34% to $55.3 billion as the ad business grew. The company also launched a $50 billion share buyback. Microsoft also reported strong results helped by cloud computing and gaming. This week, other tech giants due to publish their results include Facebook, Amazon, and Apple. In general, recent earnings have been mostly positive, according to data compiled by FactSet.
The US dollar index rose as the market waited for the interest rate decision by the Federal Reserve that will come in the American session. The bank is expected to leave interest rate and quantitative easing policies unchanged. It is also expected to boost the outlook of the American economy based on the recent positive numbers like inflation, retail sales, and unemployment rate. Still, Powell will likely maintain caution and cite the overall unevenness of the recovery.
The EUR/USD pair declined to an intraday low of 1.2055, which was along the lower side of the ascending channel on the four-hour chart. The pair has also moved slightly above the 25-day moving average while the RSI is testing the oversold level. It is also between the 23.6% and 38.2% Fibonacci retracement level. Therefore, the pair will likely bounce back as the market targets the upper side of the channel at 1.2120.
The USD/JPY recovery faced strong resistance at 109.07. On the daily chart, the pair has moved above 108.26, which was the neckline of the previous inverted head and shoulders pattern. It is still being supported by the important 25-day and 15-day exponential moving averages (EMA). The MACD and the Awesome Oscillator have moved above the neutral levels. Therefore, the pair may keep rising as bulls target the next resistance at 109.80.
The GBP/USD pair was a little changed today ahead of the Fed decision. On the three-hour chart, the pair has formed a symmetrical triangle that is shown in pink. The price is also along the 61.8% Fibonacci retracement level while the Relative Strength Index (RSI) is between the overbought and oversold levels. With the triangle nearing its confluence zone, there is a possibility that the pair will break out in either direction.