Given that today’s Fed rate hike is firmly priced in, we expect FX markets to focus on the statement and the press conference by Fed Chair Jerome Powell. Even if the policy stance is no longer be called “accommodative”, we would not expect this change to trigger any strong USD buying. The market remains unconvinced that the FOMC will move the fed funds target rate into a restrictive territory, and we agree with this assessment. With the Fed likely to reach the end of its tightening cycle next year, and other currency regions starting to catch up, we think that most of the USD’s strength is behind us – although risk sentiment will likely remain an important factor over the coming months.

This is how MyFXspot.com trades now:

EUR/USD

Trading strategy: Buy

Open: 1.1645

Target: -

Stop-loss: 1.1570 (raised from 1.1450)

Recommended size: 2.67 mini lots per $10,000 in your account

Short analysis: EUR/USD has now failed to register a daily close above the key 1.1780 Fibonacci level, 38.2% retrace of the 1.2556 to 1.1301 2018 fall, for four trading sessions in a row. This is the sign of a market that is struggling to break higher and instead is likely to drop towards the 30-day moving average now at 1.1632. We are looking to get long on dips.

GBP/USD

Trading strategy: Long

Open: 1.3130

Target: 1.3350

Stop-loss: 1.3020

Recommended size: 1.36 mini lots per $10,000 in your account

Short analysis: Price retraces beyond 61.8% of the September 21 1.3260 to 1.3041 drop, 1.3186, and is now consolidating gains above the 100-day moving average. We can see slow stochs bull cross, but 14-day momentum is slowing slightly.

USD/JPY

Trading strategy: Await signal

Open: -

Target: -

Stop-loss: -

Recommended size: -

Short analysis: Long tail on Monday's candlestick line increases the scope for further gains, as it signals a rejection of the downside. Scope grows for an eventual test of the 2018 113.40 peak.

USD/CAD

Trading strategy: Sell

Open: 1.2990

Target: -

Stop-loss: 1.3070

Recommended size: 2.43 mini lots per $10,000 in your account

Short analysis: Bank of Canada Governor Stephen Poloz is due to speak on Thursday. Money markets see a greater than 80% chance of an interest rate increase from the central bank in October, which would be the fifth hike since July 2017. We keep a sell order at 1.2990.

AUD/USD

Trading strategy: Long

Open: 0.7235

Target: 0.7435

Stop-loss: 0.7135

Recommended size: 1.50 mini lots per $10,000 in your account

Short analysis: The slide from September's high extends toward short-term structural support in the 0.7230/40 zone. Our long's entry is filled and we target 0.7380. Bull sentiment grows as the 10-day MA has crossed above the 21-day MA. Rising RSIs and the September bull hammer candle have us confident in this long.

EUR/GBP

Trading strategy: Await signal

Open: -

Target: -

Stop-loss: -

Recommended size: -

Short analysis: Retrace of the significant September 21 rally now stalling. Close inside daily cloud bearish and a bear cross on slow stochs. Momentum remains negative and close below 55-day moving average, 0.8938, could trigger a deeper pullback.