FXStreet (Guatemala) – Valeria Bednarik, chief analyst at FXStreet explained that the US Federal Reserve decided to remain on hold in its September meeting, triggering a USD sell-off all across the board.
Key Quotes:
“The Central Bank is actually concerned about China and emerging markets, and also about dollar’s strength. Janet Yellen’s statement began her statement saying that the labor market conditions have continued to improve, but inflation, has continued to run below their longer-run objective, partly reflecting lower energy prices.
Also, she said that the recent global economic and financial developments are likely to put further downward pressure on inflation in the near term, and therefore “these developments may also restrain U.S. activities somewhat.” Overall, it was a quite dovish statement, given that they made no mention to a probable rate hike over the upcoming months, although she also noted that most participants continue to think that economic conditions will call for or make appropriate an increase in the Federal funds rate by the end of this year.
The EUR/USD pair broke above 1.1400 before the closing bell, and maintains a strong upward tone as the hour chart shows that the technical indicators are heading sharply higher, despite being in overbought territory, while the price has accelerated far above its moving averages.
In the 4 hours chart, the price has found intraday support in a mild bullish 20 SMA, whilst the technical indicators have finally left neutral territory, with the Momentum indicator heading higher above 100 and the RSI consolidating around 65, pointing for additional gains on a break above the mentioned high, towards the 1.1460/70 region, a major static resistance area.”
(Market News Provided by FXstreet)