US DOLLAR FORECAST: USD PRICE ACTION STRENGTHENS, VIX INDEX CLIMBS POST-FED DECISION & POWELL PRESSER

  • US Greenback positive aspects floor following the most recent FOMC resolution and Fed Chair Powell presser
  • S&P 500 VIX Index edges greater as danger aversion takes maintain and sends shares sliding decrease
  • GBP/USD worth motion offers again positive aspects whereas the Aussie-Greenback drops into unfavorable territory

The US Greenback seems to complete Wednesday’s buying and selling session greater within the wake of the September 2020 FOMC resolution. USD worth motion has been on a roller-coaster journey during the last 24-hours with the Dollar gyrating and inflicting main foreign money pairs to whipsaw. The US Greenback strengthened broadly on the Asia session open however rapidly surrendered these positive aspects buying and selling progressed. Because the scheduled Fed announcement approached, nonetheless, the DXY Index primarily based across the 92.80-price degree.

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US DOLLAR PRICE CHART & VIX INDEX OVERLAID: 5-MINUTE TIME FRAME (16 SEP 2020 INTRADAY)

US Dollar Index Price Chart VIX Reaction to September 2020 FOMC Statement

Chart created by @RichDvorakFX with TradingView

This space of technical help was highlighted in our Fed assembly preview printed yesterday. We additionally famous potential for the US Greenback to trace the route of the VIX Index, or fear-gauge, as market individuals digested newest commentary from the Federal Reserve. Maybe upgraded financial projections for US GDP, unemployment, and inflation supplied by FOMC officers helped increase the Greenback relative to different FX friends.

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Commentary from Fed Chair Powell in the course of the follow-up press convention might have exacerbated the bid underpinning USD worth motion into the shut. The chairman famous that whereas financial exercise has picked up in current months, enchancment throughout high-frequency indicators have softened. As an example, Powell said how some measures of shopper spending and job development have slowed since mid-June.

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The Federal Reserve possible disillusioned dovish expectations with remarks emphasizing the central financial institution is ‘intently monitoring the state of affairs’ moderately than doing extra now. Fed Chair Powell additionally shied away from extra financial help right now as fiscal coverage efforts possible stands to higher assist the economic system return to ranges prevailing earlier than the pandemic hit. However, the Fed conveyed its intent to proceed the tempo of asset purchases not less than on the present tempo.

GBP/USD PRICE CHART: 1-HOUR TIME FRAME (09 SEP TO 16 SEP 2020)

GBP USD Price Chart Pound to US Dollar Forecast

GBP/USD continues to be in constructive territory on the day, however the cable has been snapping sharply decrease, down about 43-pips, after a rejection on the 1.3000-price degree. The Pound-Greenback has potential to proceed its decline from intraday highs and maybe method development help close to the 1.2900-handle. Breaching this technical help zone may open up the door for a retest of month-to-date lows amid constructing Brexit uncertainty.



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Change in Longs Shorts OI
Every day -13% 23% 4%
Weekly 9% 12% 11%

AUD/USD PRICE CHART: DAILY TIME FRAME (27 MAY TO 16 SEP 2020)

AUD USD Price Chart Aussie to US Dollar Forecast

AUD/USD worth motion additionally gravitated decrease from session highs on the again of the September Fed assertion and press convention held by Chair Powell. The pro-risk Aussie possible succumbed to promoting strain in opposition to its US Greenback counterpart as market sentiment deteriorated and triggered a rise in demand for safe-haven currencies, just like the USD. Spot AUD/USD costs may edge again towards the 0.7200-handle, which is roughly underscored by its 50-day transferring common, if danger aversion is sustained and anticipated volatility continues to extend.

— Written by Wealthy Dvorak, Analyst for DailyFX.com

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