The market is bracing itself for the FOMC rate decision on Wednesday, with light trading volume expected until then.
In line with recent Fed commentary, the market is expecting policy to remain unchanged along with a more cautious tone.
Fed chairman Powell has recently expressed his view that rates will be on hold for now while the Fed monitors developing factors.
In other market focus, UK PM Theresa May will submit her alternative Brexit plan before parliament today.
Following the government’s historic defeat just over a week ago, the odds are stacked against May, and the risks of a “no deal” Brexit remain at large.
EURUSD continues to rally following Friday’s impressive gains. For now, it seems price is continuing to track the short-term bullish channel, putting focus on an eventual further test of 1.1569. Should topside momentum run out, bears will need to see a break of 1.1217 to encourage fresh downside momentum.
GBPUSD has seen a pause in momentum ahead of the Commons vote later today. For now, focus remains on further upside with an eventual test of the Q3 2018 top at 1.3304. If price falls back from here initially, bulls will be looking to use the 1.2990 level as a base for a further run higher, targeting a test of the next key resistance at the 1.3756 level.
Weakness in USD ahead of the FOMC keeps gold above the 1298.29 resistance level which is now holding as support. While above here, focus is on a test of further resistance at the 1325.96 level, and above there the multi-year highs of 1365.53. To the downside, any sell-off is likely to find support at the 1243.90 level.
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