It was a pretty volatile week on financial markets, triggered by the FOMC meeting and Fed Chair Powell`s address to the public. Market was expecting that the Fed will hold interest rates at its September’s meeting, however, what came after the meeting came as a surprise. Namely, as per Fed Chair Powell, it could be expected more interest rate increases till the end of this year, while pivoting point might come somewhere during the next year, but only to the level of 5.1%, as per Fed's current projections. In this sense, a “higher for longer” became a new rhetoric of Fed officials. At the same time, FOMC members revised their view on the US GDP for this year, bringing it up to 2.1% during this year and 1.5% during the next year. Unemployment rate should go up to 4.1%, which would be its highest level in 2024, as per projections. Markets were not happy with such a surprise from the Fed, and both equities and Treasuries ended the week in red. The only gainer during the previous week was the US dollar.
Other macro indicators for the US published during the previous week show a modest increase in Building Permits in August of 1.543M from 1.443M for previous month. Published figures for the Euro Area show that the yearly inflation rate was modestly decreased in August to the level of 5.2%, from 5.3% posted for the previous month. It reached 0.5% on a monthly basis in August, which was modestly below market estimate of 0.6%. HCOM Manufacturing PMI Flash indicator for Germany for September reached level of 39.8, modestly above market estimate of 39.5.
During the previous week eurusd was moving within a range 1.073 down to 1.061. Selling orders were prevalent after the FOMC meeting, so the currency pair finished the week at level of 1.064. RSI continues to move close to the oversold side of the market, however, still not managing to reach a clear oversold, below the level of 30. Moving average of 50 days started its stronger move toward the MA200 counterpart, but there is still some distance between lines, which will postpone potential cross for the coming period.
The support line at 1.067 has been tested during the previous week, but there is still no clear indication that the market is ready to break this line. RSI is showing that a clear oversold side can be reached in the coming period, which will trigger a short term reversal to the upside. In this case, the currency pair might start its reversal toward the next resistance line at 1.08. Still, in case that eurusd breaks the current support line, then its next stop will be at level of 1.055.
Important news to watch during the week ahead are:
Euro: Ifo Business Climate for September for Germany, GfK Consumer Confidence for October for Germany, Inflation Rate preliminary for September for Germany, Unemployment rate for Germany, Inflation Rate flash for September for Euro Area.
USD: CB Consumer Confidence for September, Durable Goods Orders for August, GDP Growth Rate final for Q2. PCE Price Index for August, Michigan Consumer Sentiment final for September
Other macro indicators for the US published during the previous week show a modest increase in Building Permits in August of 1.543M from 1.443M for previous month. Published figures for the Euro Area show that the yearly inflation rate was modestly decreased in August to the level of 5.2%, from 5.3% posted for the previous month. It reached 0.5% on a monthly basis in August, which was modestly below market estimate of 0.6%. HCOM Manufacturing PMI Flash indicator for Germany for September reached level of 39.8, modestly above market estimate of 39.5.
During the previous week eurusd was moving within a range 1.073 down to 1.061. Selling orders were prevalent after the FOMC meeting, so the currency pair finished the week at level of 1.064. RSI continues to move close to the oversold side of the market, however, still not managing to reach a clear oversold, below the level of 30. Moving average of 50 days started its stronger move toward the MA200 counterpart, but there is still some distance between lines, which will postpone potential cross for the coming period.
The support line at 1.067 has been tested during the previous week, but there is still no clear indication that the market is ready to break this line. RSI is showing that a clear oversold side can be reached in the coming period, which will trigger a short term reversal to the upside. In this case, the currency pair might start its reversal toward the next resistance line at 1.08. Still, in case that eurusd breaks the current support line, then its next stop will be at level of 1.055.
Important news to watch during the week ahead are:
Euro: Ifo Business Climate for September for Germany, GfK Consumer Confidence for October for Germany, Inflation Rate preliminary for September for Germany, Unemployment rate for Germany, Inflation Rate flash for September for Euro Area.
USD: CB Consumer Confidence for September, Durable Goods Orders for August, GDP Growth Rate final for Q2. PCE Price Index for August, Michigan Consumer Sentiment final for September
