Mid-Week Technical Outlook: USD Firms Ahead Of Fed Minutes

A sense of caution enveloped financial markets on Wednesday as geopolitical tensions and concerns about higher U.S. interest rates hit risk appetite.

Global stocks flashed red amid the risk-off sentiment while growing concerns over earnings misses further soured the mood. With investors adopting a guarded approach towards risk ahead of the Fed meeting minutes this evening, equity markets are likely to remain depressed in the near term. In the currency space, the dollar has strengthened against most G10 currencies while gold prices remain little changed.

The main risk event and potential market shaker will be the FOMC meeting minutes later today. Expect investors to comb through the minutes for fresh clues about the rate hike path. Ultimately, whatever tone the minute's strike or fresh insight offered is likely to influence the dollar. In the meantime, markets remain tense with currency, commodity, and stock markets waiting for a fresh fundamental spark. Our focus today falls on G10 currencies with our tool of choice technical analysis.

Dollar Index on standby…

It’s been a choppy week for the Dollar Index (DXY). Prices have bounced within a narrow range with support at 103.60 and resistance around 104.30. A breakout could be on the horizon but this could need a fundamental trigger. Should prices break above 104.30, this may open a path toward 105.50. Alternatively, a break under 103.60 could see a selloff towards 103.00.

EURUSD wobbles above 1.0650

The EURUSD could be on the brink of a breakdown as prices wobble above the 1.0650 support. A solid break below this level could open the doors towards 1.0500. Should 1.0650 prove to be reliable support, a rebound back toward 1.0800 could be on the cards.

GBPUSD same old story

Nothing much has changed on the GBPUSD with support at 1.1950 and resistance at 1.2190. Given how prices experienced a sharp bounce from the 200-day SMA at 1.1950, the next key level of interest can be found at 1.2190. A breakout above this point may open a path toward 1.2450.

USDJPY bulls back in town?

USDJPY bulls may be back in action after pushing back above the 200-day SMA. There have been consistently higher highs and higher lows while prices are trading above the MACD. A solid close above the 100-day SMA could trigger a move higher toward 136.50. Should prices sink back under 134.50, the currency pair could test the 200-day SMA before sinking back towards 133.00.

Bonus: Gold

The path of least resistance for gold points south. Prices have been trending lower over the past few weeks despite the support at $1825. A strong breakdown below this level could open a path toward $1800. However, bears will need to fight support at not only the 100-day SMA but 200-day SMA. If prices can break back above the 50-day SMA, the next key level of interest can be found at $1860.