All lights Turn to the FOMC Decision

Markets Trade Risk-off Ahead of Fed Decision

The dollar continued trading lower against most of the other G10 currencies on Tuesday and during the Asian morning Wednesday. It gained only versus AUD and NZD, while it was found virtually unchanged against CAD. The greenback lost the most ground versus CHF, EUR and JPY.

EUR/USD — Technical Outlook

Although EUR/USD already had a decent run to the upside in a relatively short period of time, it is still showing willingness to push higher. The pair continues to balance above a short-term upside support line taken from the low of May 25 th. At the same time, the rate has come back close to testing the high of last week, at 1.1384. We will take a positive approach for now, however to get slightly more comfortable with higher areas, a break of last week’s high would be needed.

S&P 500 — Technical Outlook

The S&P500 index closed in the negative territory yesterday, however this morning, we can see that the cash index has already recovered all the losses. The index is still balancing above a short-term upside support line taken from the low of May 14 th, which keeps the bulls happy, for now. Even though we are still somewhat positive with the near-term outlook, we would prefer to see a strong push above yesterday’s high, at 3233, in order to get a bit more comfortable with higher areas.

As for the Rest of Today’s Events

During the early EU morning, we already got Norway’s CPIs for May. The headline CPI rate rose to +1.3% yoy from +0.8%, while the core rate increased to +3.0% yoy from +2.8%. At its latest meeting, the Norges Bank cut its benchmark policy rate to 0.0%, with officials saying that it will most likely stay at that level for some time ahead. “We do not envisage making further policy rate cuts”, Governor Olsen said in the accompanying statement. Thus, accelerating inflation may add credence to their view and allow them to sit comfortably on the sidelines.

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