It is the day after….
The day after the Fed cut rates by 50 bps. US stocks are sharply higher as a Fed initiated a floor at all-time highs in the Dow and S&P. HMMMM. However, the Fed sees it as a “recalibration” of rates after restrictive policy that helped to lower inflation over the last year or so.
In the US debt market, yields are higher as a result of the initial jobless claims showing strength.
What about the FX markets?
In this videotape, I take a look at the three major currency pairs – the EURUSD, USDJPY and GBPUSD – to kickstart the trading day for September 19.
The EURUSD moved up to test the highs for the year yesterday at 1.1189 and 1.2000. The price got to the lower of those targets yesterday and then rotated back to the downside. After testing its 200-hour moving average in the Asian session today all the way down at 1.10777, the price rebounded sharply to the upside, but fell short of the high price from yesterday (the high price today reached 1.11783).
Initial jobless claims has now sent the price of the EURUSD back toward its rising 100-hour moving average of 1.1117. Getting below that level and then a swing area at 1.1092 – 1.1104 would increase the bearish bias intraday, and have traders looking toward the 200-hour moving average once again.
Conversely, a move above 1.1140 (high of a swing area) would open the door for buyers to retake more control in the short term.
Price action volatile and so are the technicals.
- In a USDJPY, the low price yesterday fell below the low price target from September 11 at 140.714, but could not the end of December 2023 low price target at 140.248. The price rebounded higher and continued higher in the Asian session today. The high price extended above a swing area between 143.385 and 143.670, before rotating back to the downside. Initial jobless claims has pushed the price back higher and back toward the aforementioned swing area between 143.385 and 143.670. Getting above that area would increase the bullish bias and short-term at least. Stay below and a battle between it and 142.485 is probably warranted.
- The GBPUSD has a swing area going back to 2021 and 2022 between 1.3297 and 1.33581. The high price yesterday stalled against the lower of the extreme. The high price today moved within that swing area up to a high price of 1.33132 has since rotated down with the dollar moving higher on the initial claims. There is support at 1.3221 and 1.3230. The low price just reached 1.3237. Move below 1.3221 and the 100 hour moving average near 1.3194 would be targeted. Stay above the aforementioned swing area and the high price going back to the end of August at 1.32659 would be eyed as the next target to get to and through to give the buyers more confidence.
Buckle up. The markets are still volatile. Know your technical defined risk for when you are wrong. Know your technical targets if you catch the next wave.