Pre-FOMC nerves seen with US$ & Stocks by Mary McNamara

The US$ and US stocks chopped a bit lower on Monday ahead of the two-day US Federal Reserve meeting. Stocks were also looking ahead to the earnings report from Apple which ended up being a beat on both earnings and revenue. The FOMC Fed Funds Rate is announced on Wednesday and, with US Interest rate news being so widely watched, market action may remain choppy until after that.

USDX daily Cloud: the US$ index is below the Cloud on the 4hr chart but still within the Cloud on the daily chart. The bottom of the Cloud will act offer some support here. The index hasn’t closed below the daily Cloud since June 2014, a period of almost 10 months. Price may chop around now until FOMC when interest rate news may trigger a breakout move on the index. However, whilst the index is in the Cloud on the daily chart then the FX index remains divergent and this generally creates choppy trading conditions for USD-based FX pairs. The index doesn’t have far to fall though before the charts are aligned for SHORT US$ trades:

USDXdailyCloud

USD daily: note the support from the 96.50 ‘Double Top’ neck-line level:

USDXdaily

USDX 4hr: price is bouncing up off 96.50 support ahead of FOMC:

USDX4

S&P500 30 min: a choppy session with nerves ahead of FOMC and Apple earnings:

S&P30min

S&P500 daily: the index it still above the Cloud though:

S&PdailyCloud

Silver and Gold: as I had suggested in my w/e analysis both metals rallied with the thought of further US$ weakness:

Silver 4hr: back above the key $16 level:

Silver4hr

Gold: back above the key $1,200 level and perhaps there is a bullish descending wedge here now?

Gold4hr

FX Index Divergence: I regularly note that when the FX indices are divergent, as they are at present, that  trading is often lower risk and with higher reward off the shorter time frame charts during the US session. The following chart-shots are testimony to that on-going observation:

Silver 30 min:

Silver30min

Gold 30 min:

Gold30min

Cable 30 min:

GU30min

GBP/JPY 30 min:

GJ30min

Forex: there is GBP GDP, a CAD BoC Gov Poloz speech and US Consumer Confidence data later today but I wouldn’t be surprised if the markets are a bit slow ahead of the FOMC announcement on Wednesday. Also, there is rumour of hope for a Greece deal by May 9th and so that could also sway market sentiment. I still think the next new wave of FX moves hinge on which way the US$ breaks out from here: below 95.50 or above 100.

E/U 4hr: a bit higher. This could run higher if any Greece deal is reached:

EU4

E/J 4hr: ditto here:

EJ4

A/U 4hr: I wrote a separate article about this pair yesterday where I note the importance of the 0.795 level. It seems price is still headed there today:

AU4

A/J 4hr: higher here too:

AJ4

Cable 4hr: this is enjoying the recent US$ weakness despite UK election jitters:

GU4

Kiwi 4hr: this pair is clearly nervous ahead of the batch of NZD data this week. There is NZD Trade Balance and Consumer Confidence data tomorrow and RBNZ Interest Rates news on Thursday.

Kiwi4

U/J daily: keeping on with consolidating ahead of FOMC:

UJdaily

GBP/JPY: this is starting to look interesting as it butts up against a bullish descending wedge trend line:

GJdaily

Loonie daily: might head to the daily 200 EMA for support:

LoonieDaily

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