Market Participants Lock Gaze on FOMC Decision

EQUITIES PULL BACK AS INVESTORS TURN CAUTIOUS AHEAD OF FED

The US dollar traded mixed against the other G10 currencies on Tuesday and during the Asian session Wednesday. It gained ground against NOK, NZD, EUR, and AUD in that order, while it underperformed versus CAD, SEK, CHF, and GBP. The greenback was found virtually unchanged against JPY.

NASDAQ 100 — TECHNICAL OUTLOOK

After the reversal to the upside in the beginning of March, Nasdaq 100 is now slowly grinding higher, while trading above a short-term tentative upside support line drawn from the low of March 8th. That said, we can see that, so far, the price is struggling to overcome one of its resistance zones between the 13297 and 13331 levels, marked by the yesterday’s high and the current highest point of March. In order to aim for higher areas, a break above those levels is needed. Until then, we will take a somewhat-positive approach.

USD/CHF — TECHNICAL OUTLOOK

After hitting resistance near the 0.9375 hurdle in the beginning of March, USD/CHF started drifting lower and it is now seen trading below a short-term tentative downside resistance line taken from the high of March 9th. That said, for the pair to move lower, it would have to overcome one of its strong support areas between the 0.9232 and 0.9342 levels, marked by the lows of March 11th and 16th. From the shorter-term perspective, it seems that USD/CHF is forming a potential descending triangle pattern, which, according to all TA rules, tends to break to the downside. For now, we will take a somewhat-bearish approach.

AS FOR THE REST OF TODAY’S EVENTS

On the data front, the most important one seems to be Canada’s CPIs for February. The headline rate is expected to have risen to +1.3% yoy from +1.0%, but the core one is anticipated to have slid to +1.4% yoy from +1.6%. At last week’s gathering, the BoC stood pat, noting that the economic recovery continues to require extraordinary monetary policy support, and that the 2% inflation goal is not expected to be sustainably achieved until into 2023, which means that any QE tapering may be unlikely in the next months. Although officials kept the door on that front open, a rising headline CPI combined with a sliding core rate would mean that any increase in consumer prices may be due to the rise in oil prices and thus, it may be temporary. This will confirm the Bank’s view and may lessen even more the tapering likelihood.

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