US Dollar Index
Finally, the Federal Reserve (Fed) has lowered the interest rates by 25 bps this time as per market estimates. The rate decision had taken over rising concerns of a fragile global economy and muted inflation rate. Meantime, the policymakers also mentioned about leaving the door open for further rate cuts, depending on the incoming data.
Following the rate cut release, the Greenback bulls gathered some extra energy and breached the sturdy 98.32 and 98.35 resistances. Earlier the day, the July ADP Employment Change reported 56K higher than the market hopes and 44K above the previous figures. Some, the July Chicago Purchasing Managers’ Index data release disappointed the market participants. The Index came around 13.96% lower than the consensus estimates of 50.6 points.
Healthy 1.1158 resistance handle continued to restrict the pair’s upside even today. The EUR/USD pair had remained almost muted since July 23. However, the bulls attempted to test the 1.1158 resistance in the European trading session. Anyhow, the aforementioned resistance, in combination with a major counter trendline pushed the pair downwards.
Some crucial Eurozone-specific macroeconomic data came out on Wednesday morning. Few of them remained in-line with the market hopes, and few pleased the buyers while few made a disappointing data release. Notably, the Eurozone Q2 GDP reported slightly higher than the consensus estimate of around 1.0%. Needless to say, the Eurozone July YoY CPI Core reported 1.0% over 0.9% forecasts. Meanwhile, the Italian Q2 GDP recorded higher than the negative market expectations. Also, post-Fed rate cut release, the Fiber dropped to 1.1082 level, last touched in 2017.
Today, significant Consumer Price Index (CPI) data releases remained in the center stage for the Australian economy. The highly significant Q2 QoQ RBA Trimmed Mean CPI recorded 0.1% higher than the previous 0.3%. Also, the Q2 QoQ CPI reported a whopping 0.6% rise as compared to the last 0.0%. On the backdrop of supporting economic data, the AUD/USD pair breached out of a 13-day old downtrend channel. Simultaneously, the Relative Strength Index (RSI) displayed an upshot, jumping from 28 levels to 40 levels.
If the pair had drifted more upwards, then it could have encountered the robust 0.6911 resistance handle. Anyhow, the 50-day SMA had crossed below both the 100-day and 200-day SMAs, forming a “Death Cross”. At 18:00 GMT, the Fed announced a 25bps rate cut as per expectations, allowing the Greenback to surge. On the contrary, such an upliftment in the USD Index discouraged the Aussie pair bulls. Post rate cut decision, the AUD/USD slipped and was testing the 0.6863 support handle.
At around 19:00 GMT, the Chinese Yuan pair was forming a Doji Candlestick pattern on a daily chart, revealing net zero change since the last closing. Notably, the USD/CNY pair was making rigorous attempts to make a breakthrough out of the healthy 6.8936 resistance since June 20.
Even if the pair had made a triumphant march breaching above the aforementioned upside barrier, then the 6.9315 resistance would have got activated. Nevertheless, a 1-month old ascending support line was in place to limit pair’s daily losses. During the early hours, the Chinese July NBS Manufacturing PMI recorded 49.7 points over 49.6 points forecasts. Somehow, the July Non-Manufacturing PMI reported 1.49% lower than the street estimates of 54.5 points.