The Fed will maintain asset purchases at $120 billion a month until there is substantial further progress

29 July 2021, 03:49

Market Focus

US markets opened mixed on Wednesday after the FOMC meeting of no move on asset purchases. The Dow Jones Industrial Averages dipped 127.59 points. The S&P500 closed with 4400.64 points whilst the tech-heavy Nasdaq 100 climbed 0.7%.

FOMC Meeting Key Takeaways:

  • The Fed has not made any decisions on the timing of taper.
  • The Fed continues to hold rates between zero and 0.25%.
  • The economy continues to grow even though there are concerns over the new- variant delta coronavirus.
  • The rising threat of the pandemic has not yet made a big impact on the economy.
  • The Fed will maintain asset purchases at $120 billion a month until there are substantial further progress.
  • In response to the spike of the inflation, the Fed officials have said that price spikes are likely temporary and are driven by the economic reopening.
  • Unemployment rate has declined significantly below 6%. However, there are still long ways to full employment.
  • The Fed will establish two standing repurchase- agreement facilities.

Large-Cap China stocks listed in the US rebounded after Chinese regulators reassure s investors about the market’s stability by holding a conference attempting to ease market fears. In Asia, the Hang Seng Index reversed losses after slumping several days.

Main Pairs Movement

Gold wavered and closed with $1809 after the FOMC meeting as the Fed sees progress toward tapering but not yet decides on the exact plan.

USDJPY closed below 109.07 as the US policymakers sounded more optimistic than expected.

The Aussie edged higher, closing up 0.2% as the Fed’s tapering plan was progressing but still some way off.

The EURUSD seesawed around 1.1800 level amid an expected Fed decision. By end of the day, the currency pair climbed 0.22%.

The GBPUSD moves higher, closing up 0.17%. The US dollar remained weak after the Fed’s dovish tone.

Technical Analysis

GBPUSD (4-hour Chart)

The GBPUSD pair heading to a recent high at 1.39 as nearly market close, trading a handful of pips below its post-Fed high at 1.3911, and chances are skewed to the upside. Fed chairman poured cool water on tapering speculation. For technical aspect, RSI indicator close around 66 figure which suggest strong-bull guideline extends recently momentum at least for the short term. For the moving average side, 15 long SMA indicator continuing its ascending momentum and 60 long SMA indicator turn sideway traction in the daily market.

As price action, the pound is holding on to a powerful resistance at 1.3896~1.39 around. if the market could extend its current upside momentum to exceed immediately resistance, it would head to a higher stage firmly. On the downside, the 1.3475 level is still a defensive line for bid buyers.

Resistance: 1.3896, 1,3985

Support: 1.36, 1.3665, 1.3745

XAUUSD (4- Hour Chart)

Gold prices are still choppy in the tiny range between first resistance and support level after the post-Fed statement. From the technical perspective, the RSI indicator settles at 55 figures as of writing, suggesting slightly bull movement ahead, but we believed it still lacking a critical impetus. For the moving average side, 15 long SMA indicator shows a flat move in the day market, and 60 long SMA went to a downward trend.

In light of the aforementioned, we expect the gold market will high probability struggle in a consolidation range. On the downside, we expect 1795 will be powerful support. If the market penetrates the first immediately support, it would move to lower lows which eye on 1765.5 level. On the up way, 1811 around shows price cluster resistance as the first pivotal checkpoint.

Resistance: 1811, 1830.5

Support: 1795, 1765.5

EURUSD (4- Hour Chart)

Eurodollar reversed from 1.1770 level and jumped up to 1.1842, approaching the highest level since July 15th, after Fed expect to no rush to taper. Fed Chairman Powell said “substantial further progress is still a ways off. For the technical side, the RSI indicator set 61 figures that gain another higher stage recent, suggesting a bull movement guidance for the short term. For moving average perspective, 15 long SMA indicator moving in a flat with modest momentum in recent and 60 long SMA still moving flat as market choppy in close range. Furthermore, 2 lines have a golden cross that shows a strong signal for upside traction.

As the euro back and forth to test the 1.1804 level in the daily market, it seems finally stand above the 1.1804 level which is a pivotal resistance stage in light of price action. if the price could propel to higher than the next price level would eye on 1.1848~1.188. In contrast, we see the market was stopped by 1.1848 level in day market and still expect 1.1804 is the short run pivot support. If the market reverses to the down way the first support, it would fall into a quagmire between 1.1766 and 1.18040 as tiny volatility.

Resistance: 1.1848, 1.188

Support: 1.1804, 1.1766, 1.17