US Greenback & VIX Advance Following the Fed

US DOLLAR FORECAST: USD PRICE ACTION STRENGTHENS, VIX INDEX CLIMBS POST-FED DECISION & POWELL PRESSER

• US Greenback features floor following the most recent FOMC determination and Fed Chair Powell presser
• S&P 500 VIX Index edges increased as threat aversion takes maintain and sends shares sliding decrease
• GBP/USD value motion provides again features whereas the Aussie-Greenback drops into damaging territory

The US Greenback appears to be like to complete Wednesday’s buying and selling session increased within the wake of the September 2020 FOMC determination. USD value motion has been on a roller-coaster journey during the last 24-hours with the Dollar gyrating and inflicting main foreign money pairs to whipsaw. The US Greenback strengthened broadly on the Asia session open however shortly surrendered these features buying and selling progressed. Because the scheduled Fed announcement approached, nonetheless, the DXY Index based mostly across the 92.80-price stage.

US DOLLAR PRICE CHART & VIX INDEX OVERLAID: 5-MINUTE TIME FRAME (16 SEP 2020 INTRADAY)

Chart created by @RichDvorakFX with TradingView

This space of technical help was highlighted in our Fed assembly preview revealed yesterday. We additionally famous potential for the US Greenback to trace the course of the VIX Index, or fear-gauge, as market members digested newest commentary from the Federal Reserve. Maybe upgraded financial projections for US GDP, unemployment, and inflation offered by FOMC officers helped enhance the Greenback relative to different FX friends.

Commentary from Fed Chair Powell through the follow-up press convention might have exacerbated the bid underpinning USD value motion into the shut. The chairman famous that whereas financial exercise has picked up in latest months, enchancment throughout high-frequency indicators have softened. As an example, Powell said how some measures of client spending and job development have slowed since mid-June.

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The Federal Reserve doubtless dissatisfied dovish expectations with remarks emphasizing the central financial institution is ‘carefully monitoring the scenario’ relatively than doing extra now. Fed Chair Powell additionally shied away from extra financial help at the moment as fiscal coverage efforts doubtless stands to higher assist the financial system return to ranges prevailing earlier than the pandemic hit. However, the Fed conveyed its intent to proceed the tempo of asset purchases not less than on the present tempo.

GBP/USD PRICE CHART: 1-HOUR TIME FRAME (09 SEP TO 16 SEP 2020)

GBP/USD remains to be in optimistic territory on the day, however the cable has been snapping sharply decrease, down about 43-pips, after a rejection on the 1.3000-price stage. The Pound-Greenback has potential to proceed its decline from intraday highs and maybe method development help close to the 1.2900-handle. Breaching this technical help zone might open up the door for a retest of month-to-date lows amid constructing Brexit uncertainty.

AUD/USD PRICE CHART: DAILY TIME FRAME (27 MAY TO 16 SEP 2020)

AUD/USD value motion additionally gravitated decrease from session highs on the again of the September Fed assertion and press convention held by Chair Powell. The pro-risk Aussie doubtless succumbed to promoting strain towards its US Greenback counterpart as market sentiment deteriorated and prompted a rise in demand for safe-haven currencies, just like the USD. Spot AUD/USD costs might edge again towards the 0.7200-handle, which is roughly underscored by its 50-day transferring common, if threat aversion is sustained and anticipated volatility continues to extend.

— Written by Wealthy Dvorak, Analyst for DailyFX.com

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