Central Banks Pause Rates. Markets Await NFP
The Federal Reserve decided unanimously to maintain interest rates at 5.25-5.50%, a highly anticipated move that retains significant implications for monetary policy's future course. Despite this decision, the FOMC refrained from definitively ruling out potential future rate hikes, leaving room for policy adjustments. During his press conference, Chair Jerome Powell expressed deep concerns about ongoing inflation, implying that the current policy might not be restrictive enough. Rising bond yields also captured the Fed's attention, contributing to tightening financial conditions.
On the other side of the Atlantic, the Bank of England (BOE) took a similar stance by holding existing interest rates, following a series of consecutive rate hikes from December 2021 to August 2022. The UK grapples with high inflation, which surged to 6.7% in September, significantly exceeding the BOE's 2% target, similar to the US and Europe. Core inflation, excluding volatile food and energy prices, remains uncomfortably high at 6.1% for the UK. The country maintains a 15-year high interest rate of 5.25%, and it remains to be seen how this would impact the NFP release.
USDCAD - H4 Timeframe
USDCAD began a steady decline a short while ago, and the drop is currently approaching a demand zone. When price reaches the demand zone, I expect to see a bullish rally because the demand zone overlaps with other confluences like; the 200-period moving average, trendline support, and the bullish array of the moving averages indicating a bullish trend is at play.
Analyst’s Expectations:
Direction: Bullish
Target: 1.38349
Invalidation: 1.35614
EURUSD - H4 Timeframe
At this time, we can see the price action on the 4-Hour timeframe of the EURUSD chart returning to the previous high where we have a supply zone. My expectation is that the bullish move will be rejected from the supply zone, back to the 50-period moving average.
Analyst’s Expectations:
Direction: Bearish
Target: 1.06024
Invalidation: 1.06968
GBPUSD - H4 Timeframe
GBPUSD’s 4-Hour timeframe chart provides a much cleaner price action compared to the EURUSD chart of the same period. Here on GBPUSD we see the supply zone clearly at the 76% of the Fibonacci retracement as the price action slowly approaches it. The bearish moving average array is also quite clear.
Analyst’s Expectations:
Direction: Bearish
Target: 1.21124
Invalidation: 1.22916
CONCLUSION
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