The US Dollar is starting the week with some consolidation ranges. The market is deciding what to expect from the FOMC – either some squaring up and paring of USD-strength, or the continuation of it. Let’s take a look at USD/JPY, GBP/USD, and the USD/CAD.
The 1H USD/JPY chart shows a very bullish market taking a break below 107.40. If price can fall below 107.00, we might be in a consolidation mode ahead of Wednesday’s FOMC meeting. A break above 107.40 however simply continues the current uptrend, which has upside risk toward 108.90-109 area, which is a support pivot and the low in 2006.
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The 1H GBP/USD chart shows market that has already pared some strength in the USD. The Sterling-US dollar pair put in a price bottom last week above 1.6052. It ended the week holding below 1.6277 and the 200-hour simple moving average. It then started trading in a small consolidation range with support above the 1.62 handle. If price breaks above 1.6280, we are likely to see upside risk toward the 1.64 this week. A break below 1.62 however returns the pressure toward the 1.6051 level. Below that the 1.60 handle is the next key level to monitor for support.
Cable could be pressured if the Scots referendum for independence succeeds. The vote is on Wednesday, which is when the FOMC meeting and press conference will be as well. USD-crosses, especially the GBP/USD will likely be very volatile during Wednesday (9/17).
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The USD/CAD was sharply bullish last week after a 2-session consolidation/correction. The pair is now respecting the 1.1100 handle as resistance. It is in a mini-consolidation with 1.1080 as support. A break below 1.1080 might open up a support/resistance pivot around 1.1030. This scenario would still be in the medium-term bullish outlook, which has the 2014-high of 1.1278 in sight.
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