The US Federal Reserve policymakers will meet tonight for the FOMC meeting to decide whether or not to increase interest rates and the outcome of this meeting is more likely to impact the dollar, and other related foreign exchange pairs.
With many trader’s speculation on a mixed hawkish outcome, our currency pair of interest is the cable which has been trying to stage a comeback against the dollar since the June 23rd UK referendum.
- On the daily chart the pair is currently resting on a lower trendline, tested twice (post Brexit lows) forming an upward channel.
- The pair is currently trading around the Murray Math 1/8 (weak, stall and reverse) level on the daily chart and 0/8 (ultimate reversal) level on the 4hr chart.
- Classic divergence seen on 14 period RSI and 14,3,3 Stochastic Oscillator
- The Fibonacci 127.2 extension level on the 4hr chart has been tested (see photo below).
Certainly, the fundamentals cannot be absolutely discredited, the long awaited interest rate decision will be released tonight and a dovish or mixed hawkish outcome could favour the present cable’s technical bias.