Federal Reserve policy change provokes major financial market moves
A major policy change from the Federal Reserve provoked a bout of extreme volatility in financial markets this week, as the US central bank outlined a new inflation measures. Federal Reserve Chairman Jerome Powell used his annual Jackson Hole speech to announce that the FED will be using average inflation targeting. The move from the central bank is seen as being an aggressive measure to keep inflation above two percent, at a time when the US economy has entered in a severe depression. The US dollar strengthened after the announcement, while the stocks firmed, and precious metals rallied, and then reversed lower.
- The USDJPY pair is only bullish while trading above the 106.00 level, key resistance is found at the 107.00 and 107.40 levels.
- The USDJPY pair is only bearish while trading below the 106.00 level, key support is located at the 105.40 and 105.00 levels.
The cryptocurrency market came under heavy selling pressure this week as traders continued to book profits, following five-weeks of strong gains for top coins such as Bitcoin, Ethereum, and Litecoin. Bitcoin led the decliners inside the top ten cryptocurrencies, and reversed back towards the $11,100 support level, after peaking around the $11,800 resistance level in early-week trade. Ethereum slumped below the $400.00 support level following the recent breakout towards the $450.00 resistance zone. Litecoin dropped towards the $55.00 as the eight largest cryptocurrency edged closer towards its trend defining key 200-day moving average.
- The BTCUSD pair is only bearish while trading below the $11,300 level, key support is found at the $10,600 and $10,100 levels.
- If the BTCUSD pair trades above the $11,300 level, buyers may test towards the $11,800 and $12,500 resistance levels.
The British pound advanced towards a new 2020 high against the US dollar currency this week, as the GBPUSD pair retained a strong bid-tone on the cryptocurrency market. Traders looked past bearish news from ongoing Brexit negotiations, and unfounded rumors that British PM Boris Johnson may hand in his resignation in six-months time. Sterling rallied sharply after the Federal Reserve announced its change in measuring inflation. The British pound later fell back towards the 1.3170 level against the greenback, as traders decided to book profits afrer another week of strong gains.
- The GBPUSD pair is only bearish while trading below the 1.3150 level, key support is found at the 1.3000 and 1.2950 levels.
- The GBPUSD pair is bullish while trading above the 1.3150 level, buyers may test towards the 1.3290 and 1.3320 resistance levels.
Traders continued to enjoy extreme volatility in the precious metals space this week as gold and dilver traded in an extremely large trading range. Gold rallied towards the $1,970 technical area after the Jackson Hole economic symposium, and then reversed back towards the $1,900 support area. Gold traders have recently been struggling to break back above the $2,000 resistance level, as the yellow-metal strggles to move above its current all-time high. Silver also enjoyed another week of extreme volatility on the metals market, and traded between the $26.00 and $28.00 levels.
- XAUUSD is only bullish while trading above the $1,920 level, key resistance is found at the $1,970 and $2,020 levels.
- XAUUSD is only bearish while trading below the $1,920 level, key support is located at the $1,900 and $1,880 levels.