- USD rebounded after reaching a low, watching Federal Fund rates decision for July due for release early hours in tomorrow morning.
- Oil prices shot up 4% after the stocks data from API showed that U.S. oil inventory declined sharply by 10.2 million barrels, looking for clues from the upcoming oil stocks report from EIA today.
The U.S. dollar recovered and broke above a descending trend line resistance on its 1 hour chart after touching a low Tuesday (25, July). Its recovery probably due to short-term speculators’ expectation of some policy changes could be made by FOMC ahead of the upcoming FED policy decision for July. In addition, the recovery was also could be seen as a near term correction for previous declines. The most significant movement yesterday was in the crude oil that it soared 4%. Oil price accelerated its rally to break above its daily EMA200 as the stocks data released at 4:30 AM Beijing time from API showed that U.S. oil inventory declined sharply by 10.2 million barrels last week after its OPEC meeting-inspired rally continued.
The dollar Index (DXY) rallied and broke above its H1-peirod EMA60 after hitting a low of 93.435. Its upward sloping short-term moving averages remained divergent with bullish bias and in an attempt to move above its flattened long term moving averages which contracted significantly and played as resistances. Let’s see if that could materialize while look for clues from FED decision.
（DXY H1 chart）
Switching gears over to the non-U.S. currencies now, the euro shot up and created a new high for 2017 at 1.17107 before retracement. The single currency fell back to H1-period EMA60 support and consolidated around the level, with upside resistance at its highs, downside support at H4-period EMA30. The pound shot up to a new high thus far this week and touched 76.4% Fibonacci level of the previous downleg at 1.3079 before retracement, similar to the price action in the euro. The commodity currency, Australian dollar, failed to stage a bullish breakout of its short-term range and after that continued to head lower and test a rising trend line support on its 4 hour chart. Overall market sentiment appears to be cautious ahead of FOMC decision.
（AUD/USD H4 chart）
For precious metals, gold continued to fall in a choppy session below a rising trend line support on its 1 hour chart after creating a lower high at 1257.5. Gold found its diverging long term moving averages with bullish bias as supports, which coincided with 50% of previous rally, showing by its 4 hour chart. In the meantime, its short term moving averages pointed lower after converging. Gold could trade in a range, possibly between H1-period resistances and H4-period supports ahead of FOMC decision.
（Gold H4 chart）
By JasonZou —— Chief Analyst of AvaTrade China
Disclaimer: The views and opinions expressed in this article are those of the authors and for the purpose of reference only, and shall not be relied upon by investors in making any trading decisions.