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Intraday Market Analysis – USD awaits catalyst

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EURUSD awaits breakout

The US dollar consolidates ahead of the FOMC. A tentative break above 1.0190 prompted sellers to cover their bets, easing the downward pressure. The bulls will need to lift offers in this key supply zone before they could hope for a sustained recovery. In the meantime, the price action is consolidating above 0.9930. The narrowing range shows indecision before a catalyst leads to a breakout which would decide whether the euro stays north or south of parity. A fall below 0.9930 may resume the downtrend below 0.9870.

USDCAD tests key resistance

The Canadian dollar retreated as August’s inflation data fell short of expectations. The rally has gained traction after the pair cleared the double top at 1.3200. Diverging moving averages on the daily chart indicates an acceleration to the upside. As the pair hovers under November 2020’s high at 1.3390, the RSI’s overbought condition may trigger some profit taking, driving the greenback lower momentarily. Buying interest could be expected around 1.3200 from the base of the bullish breakout.

UK 100 struggles for bids

The FTSE 100 slips as expectations of a hawkish BoE weighs on the growth prospect. Buyers’ struggle to hold onto their recent gains above 7230 weighs on sentiment. The latest optimism has waned after a bounce failed to secure 7330, leaving the index vulnerable to another round of sell-off if the bulls start to pull out. 7130 is an important support and its breach could attract momentum sellers and extend losses to July’s lows around 7020. There the FTSE would face the risk of a bearish reversal in the medium-term.

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