- The buck declined further towards a low for 2017 in the short term by news that U.S. Federal Reserve vice Chair Stanley Fischer resigned.
- The ECB is widely expected to hold policy steady at 19:45 BJT today with the spotlight shining on Draghi’s press conference.
The biggest news story in New York session Wednesday (6 Sep.) was U.S. Federal Reserve vice Chair, 73-year-old Stanley Fischer submitted resignation as a member of FOMC, leaving four of the seven seats on the Fed Board vacant. It is also worth to notice that Janet Yellen’s term as Fed Chair will end on February 3 next year. Thus, who will be named by Trump as member of FOMC and how the drama will impact policy decision of the Fed going forward will be the major topic among market participants in the period ahead. The ECB is widely expected to hold policy steady at 19:45 BJT today with the spotlight shining on Draghi’s press conference.
The dollar index (DXY) came under pressures due to aforementioned news and slipped to 76.4% Fibonacci level of up move last week at 91.94. Its diverging short term moving averages went down in bearish order, and dragged down its long term moving averages then drifted into the state of divergence with bearish bias. Whether or not the index could find supports above last week’s lows in the short term will hinge on the outcome of today’s ECB policy meeting.
（DXY H4 chart）
As to non-U.S. currencies, the euro finished the day and formed a “doji” after trading in a narrow range. The single currency still held downside trend supports firmly despite sharp decline in late session on 4 hour chart. However, whether or not the pair could break its supports at H4-period EMA60 will be important to observe against the backdrop of expectations that Draghi’s comments could put downward pressures to the euro. The pound reacted off highs of 161.8% target/resistance and pulled back a bit. It will be interesting to watch whether or not the sterling could retest downside support around 1.30 handle on the day. The commodity currency Aussie dollar hovered around its highs. We should stay patient and wait potential breakouts.
（GBP/USD H4 chart）
Let’s take a look at precious metals. Without significant upside momentum, the gold dived in New York session, breaking below supports at H1-period EMA60. Its uptrend on 4 hour chart remained intact and the price stayed above its H4-period EMA30 despite its short term moving averages attempting to cross below its long term moving averages. The yellow metal may consolidated around its H1-EMA60 ahead of ECB decision. However, gold price could test downside supports at H4-period EMA30 even H4-period EMA60 if Draghi indeed delivers dovish message which could push the dollar up.
（Gold H1 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.