On Wednesday, the 19th of December, the event calendar is quite rich in important data releases. Germany will post PPI data, the UK will present Consumer Price Index data, Retail Price Index data and PPI data. The US will post Current Account data, Existing Home Sales data and Crude Oil Inventories data. Canada will present CPI data. The event of the day is Fed interest rate decision later during the trading day.
DXY analysis for 19/12/2018:
The FOMC interest rate decision is scheduled for release at 07:00 pm GMT, together with FOMC Statement and FOMC Economic Projections. The FOMC Press Conference is scheduled 30 minutes later. The market participants expect Fed to hike the interest rate from 2.25% to 2.50% tonight.
The press conference is about an hour long and has 2 parts - first, a prepared statement is read, then the conference is open to press questions. The questions often lead to unscripted answers that create heavy market volatility. The FOMC conference is among the primary methods the Fed uses to communicate with investors regarding monetary policy. It covers in detail the factors that affected the most recent interest rate and other policy decisions, along with commentary about economic conditions such as the future growth outlook and inflation. Most importantly, it provides clues regarding future monetary policy.
Let's now take a look at the DXy technical picture at the H4 time frame before the FOMC decision is made. The market has tested the level of 97.69 again on 14th December and since then the price dropped towards the level of 96.71 (local low). The market conditions are now oversold and the momentum is neutral as it is hovering around its fifty level. The key short-term support at the mentioned level of 96.71 must be violated in order for the market to move lower towards the level of 96.66 and 96.63. If those two levels are broken as well, then the next support is seen at the level of 96.40.
