U.S. Strengthens While The Market Struggles
2022.09.19 13:44
A busy week ahead for Central Banks with six scheduled events across five countries. Market participants are mainly concentrating on the Federal Reserve, which is predicted to increase by 75 basis points, bringing the Federal Fund Rate (FFR) to 3.25%.
Overall, the market’s risk appetite seems to be low, with most assets in the red. hit a 3-month low, declining by 4.62% over the past 5 hours ahead of today’s market open. The US stock market is also down today, with seeing the strongest decline at 0.70%.
and are also lower than the market open price. On the other hand, the US Dollar is in the green. The has increased by 0.22% this morning and is almost at a 2-week high. Some analysts believe the USD can increase above its yearly high this week, but the price movement will depend on the Fed’s announcements.
Crude Oil – Technical View
Crude oil fell this morning and is now close to Friday’s price lows. The price has declined for six consecutive hours and is approaching previous support levels. Traders are contemplating whether the price will form a bearish breakout or if the price will rebound.
Crude oil has received some positive news from its main buyers – China. Chengdu has confirmed that they will reopen today, and lockdown restrictions will be instantly lifted. The positive news is that the move will likely increase demand for crude oil.
However, some economists have advised that this may further pressure the price. The lockdowns in Chengdu only lasted 18 days, much shorter than the 2 ½ months experienced by Shanghai. According to local reports, the success of the zero policy in Chengdu can trigger more lockdowns elsewhere.
Analysts have also advised that crude oil prices have been pressured by Iran’s increasing supply, specifically to Asian countries. According to reports, the country has provided 20 million barrels of crude oil over the past three months – most of which have been bought by China. Iran is still awaiting a decision on the “nuclear deal,” If approved, the market will likely witness a change in the balance of supply and demand.
In addition to the above, the price continues to be pressured by the increasing interest rates across global economies. Higher interest rates are predicted to trigger a lower demand in the longer term. However, CFD traders, of course, will continue following the current price movement.
EUR/USD – Technical View
The price saw a strong spike on Friday, taking the exchange rate outside its latest recurring price range. However, the price this morning has declined by 32 PIPs, taking the instrument back within the previous range and again below parity.
When looking at indicators, we can see the price is trading below all moving averages, and most indicators have now crossed over downwards, indicating a downward price movement. Oscillators, such as the CCI (Commodity Channel Index), also indicate a potential downward price movement.
Investors are pricing in a 75-basis-point increase in interest rates by the US regulator. However, some economists point to a possible hike of 100 basis points at once. If this occurs, the price can react strongly as it’s not predicted across the market.
In addition, the Federal Reserve is expected to publish updated forecasts for inflation and economic growth. Many traders are eager to see if the Central Bank believes the rate hikes will trigger worsening economic conditions.
