Fed interest rate decision due out today

The Fed’s interest rate decision is set to take place later on today. Currently, FFF implies a 99% probability for the bank to remain on hold during their meeting, as such our attention now turns to the bank’s accompanying statement. Should the statement be perceived as predominantly hawkish in nature, i.e maintaining interest rates at their current for a prolonged period of time, it could provide support for the dollar. On the flip side, should the accompanying statement be perceived as predominantly dovish in nature i.e preparing to cut interest rates, then we may see the dollar weakening. In our opinion, we would not be surprised to see a slight hawkish undertone, as the US Core PCE rate for March came in higher than expected at 2.8%. Thus, with the Fed’s favourite tool for measuring inflationary pressures in the US economy, being the Core PCE rates, it could be of concern to policymakers that inflation remains persistent in spite of the current interest rate levels. In conclusion, it could increase pressure on the Fed to maintain its hawkish rhetoric.In the Equities markets, Amazon’s (#AMZN) and Coca-Cola’s (#KO) earnings report for Q1 of 2024, saw both companies beat revenue and earnings per share expectations set by economists. The better-than-expected earnings reports could support their stock prices respectively. Lastly, per Bloomberg BOJ accounts appear to suggest that Japan’s Government intervened in support of the Yen on Monday.

EUR/USD appears to be moving in a downward fashion having broken below our support turned resistance level at 1.0680 (R1). We opt for a bearish outlook for the pair and supporting our case is the breaking below our upwards moving channel which was formed on the 16^a. of April, in addition to the RSI indicator below our chart currently registering a figure near 40 implying a bearish market sentiment. For our bearish outlook to continue, we would require a clear break below the 1.0600 (S1) support level, with the next possible target for the bears being the 1.0505 (S2) support line. On the flip side for a bullish outlook, we would require a clear break above the 1.0680 (R1) resistance level, with the next possible target for the bulls being the 1.0765 (R2) resistance line. Lastly, for a sideways bias, we would require the pair to remain confined between the 1.0600 (S1) support line and the 1.0680 (R1) resistance level.

XAU/USD appears to be moving in a downwards fashion. We maintain a bearish outlook for the precious metal and supporting our case is the RSI indicator below our chart which currently is running along the figure of 30, implying a bearish market sentiment. For our bearish outlook to continue, we would require a clear break below the 2271 (S1) support level, with the next possible target for the bears being the 2222 (S2) support line.On the flip side for a sideways bias,  we would like to see the commodity remain confined between the 2271 (S1) support level and the 2315 (R1) resistance line. Lastly, for a bullish outlook we would require a clear beak above the 2315 (R1) resistance line with the next possible target for the bulls being the 2360 (R2) resistance level.

Other highlights for the day:

In a busy Wednesday, we note the release of the UK’s Nationwide house prices rate and the UK’s Manufacturing PMI figure both for the month of April. Later on during the American session, we note the US ADP Employment figure, Canada’s Manufacturing PMI figure, the US S&P and ISM Manufacturing PMI figures all for the month of April. Followed by the US JOLTS Job Openings figure for March and the US EIA weekly crude oil inventories figure. In tomorrow’s Asian session we note Australia’s building approvals rate and trade balance figure both for the month of March. On a monetary level, we note the Fed’s interest rate decision followed by Fed Chair Powell’s speech, RBNZ Governor Orr’s speech and BoC Governor Macklem’s speech. Lastly in tomorrow’s Asian session from a monetary standpoint, we note the release of the BoJ’s March meeting minutes.

EUR/USD H4 Chart

• Support: 1.0600 (S1), 1.0505 (S2), 1.0385 (S3)
• Resistance: 1.0680 (R1), 1.0765 (R2), 1.0860 (R3)

XAU/USD Daily Chart

Support: 2271 (S1), 2222 (S2), 2173 (S3)

Resistance: 2315 (R1), 2360 (R2), 2410 (R3)

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