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August 1, 2018

IronFX, FOMC interest rate decision & US considers higher tariffs for Chinese products

Check out today’s economic highlights and follow the market trend with IronFX!

This article is originally referred from IronFX News.

FOMC interest rate decision

Late in the American session (18:00, GMT) the FOMC is expected to announce its interest rate decision.

The bank is widely expected to remain on hold and currently Feds Funds Futures imply a probability of 96.37% for that scenario.

As the bank is expected to remain on hold, market focus may shift to the accompanying statement which may contain comments about the high inflation rate, the strong GDP growth rate and the low unemployment level.

A number of analysts seek a clear message for the possible 2 future rate hikes in 2018, especially after recent comments made by US president Trump.

A neutral to hawkish tone in the accompanying statement could support USD, while a neutral to dovish tone may weaken it.

EUR/USD continued its sideways movement yesterday testing the 1.1745 (R1) resistance line and correcting lower later on.

The pair could experience some bearish tendencies today should the FOMC meeting favor the USD side.

Should the bulls take over the market we could see the pair breaking the 1.1745 (R1) resistance line.

On the other hand should the bears take over we could see the pair breaking the 1.1640 (S1) support line and aim for the 1.1580 (S2) support barrier.

US considers higher tariffs for Chinese products

The US administration seems to be considering to increase planned tariffs from 10% to 25%, for $200B worth of Chinese imports.

The move adds further pressure to China as it would face increased tariffs on about half of its exports in the US.

While China has not responded initially, reports state that representatives of the US and China have been speaking privately to restart negotiations.

Analysts currently, consider the move as another negotiating tactic on behalf of the US.

Should there be further escalation of the US-Sino trade dispute we could see the USD strengthening in the short term while commodity currencies may be hit.

USD/JPY rose yesterday breaking the 111.30 (S1) resistance line (now turned to support) aiming for the 112.05 (R1) resistance line.

In regards to yesterday’s analysis the pair has broken the 111.30 (S1) resistance line and we lift our sideways bias in favor of a more bullish outlook.

Hence, we could see the pair trading in a more bullish market today if the FOMC meeting favors the USD side.

Please note that the RSI indicator has almost reached the reading of 70, implying a bullish momentum however with room for further advancements available.

Should the pair find fresh buying orders along its path, we could see it breaking the 112.05 (R1) resistance line while aiming if not breaking the 112.50 (R2) resistance barrier.

Should it come under selling interest we could see the pair dropping and breaking the 111.30 (S1) support line.

In today’s other economic highlights:

In the European session we get UK’s Nationwide HPI rate as well as the Markit/CIPS manufacturing PMI figure, both for July, while from the Eurozone we get the final release of the Markit manufacturing PMI for July.

In the American session we get from the US the ADP National Employment figure and the ISM manufacturing PMI, both for July, while later on the EIA weekly crude oil inventories figure is to be released.

Original Source: IronFX News

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