Market continues post FOMC moves

Midday Update

The market opened in red as foreign currencies continues to sell off against the USD after the Fed hawkish remarks on interest rate hikes in 2022. Although the rates hike is not set in stone, sentiments continue to point to an imminent hike as early as March this year.

During the European session open, the GBPUSD continued to fall past the 3 weeks support setting a new low below 1.3433. The cable is currently trading at 1.3403 and maintains its bearish outlook in the near-term.

The EURUSD suffers selling pressure against the green back in early European session as investors price in on a hawkish dollar outlook from yesterday’s FOMC press conference. The anticipation that the Fed is likely to increase interest rates in early March has sparked selling pressure on the EURUSD.

Currently the EURUSD has breached a 2 months support at 1.11800. Short-term traders may look to sell further downwards towards 1.1150; although the market remains susceptible to pullbacks in the near-term.

Traders should watch out for US GDP quarter on quarter due for release during New York Open, which is a preliminary inflation indicator, and a positive reading could reinforce a bullish sentiment on the Dollar and the market will likely experience a further selling pressure.

AUDUSD is now trading below 0.7100 psychological region pushing to its lowest in 5 weeks. If the pair continues to trade below the 0.7080 bears could regain strength to push it lower towards 0.7000. However short- term bulls could seek to ride with the short-term correction on the current trend towards 0.7114.

Gold tumbles from 1853 highs as the yellow metal succumbs to Dollar strength. During the European session, it found a near-term support at 1809 and a continuation towards 1805 one-week support is highly probable. A breach below that support could cause selling pressure in the near-term towards 1782 support.

US treasuries continue to take advantage of the FOMC outlook underpinning the Dollar strength in the near-term. US treasury 10-year yields rose to 1.876, near their highest since February 2020 and early Thursday session investors seems to digest the possibilities of a hike as the asset retreats from yesterday’s high. The Focus now shifts towards the GDP economic releases for fresh trading opportunities on gold.

Cryptocurrency markets attempts to regain from yesterday’s losses as the Bitcoin January options expire on Friday 28 January. The BTCUSD still suffers bearish sentiment although it found a temporary support at $35000. BTC Options expiration could cause further downside pressure towards $30000 as options expirations are associate with massive liquidations.

However new money could be ready to enter the market since the BTCUSD is trading on a pivot of its all-time value. A hold above the $30 000 could draw bulls to anticipate an early rise.