U.S. Stocks Plummet After Fed Raises Interest Rates; Crypto Rally Intensifies

Traditional financial markets are having a choppy Fed-day, as usual, with a slight bullish bias thanks to the budget deal between the European Union and Italy. The Fed’s looming rate decision caused much lighter trading activity in the most important assets, but the Euro managed to get gain ground on most of its major peers on following the announcement, although equity markets are still in deep trouble in Europe, and the bearish shift remains dominant.

US Treasury yields continued to hit multi-month lows today, and investors are now clearly expecting a dovish shift by the Fed today, even as analysts are still calling for a rate hike. Following the Fed, the Bank of Japan will also hold its monetary meeting tomorrow, and although the Yen has been relatively strong in recent days amid the volatile trading in equities, we think that the central bank will use the recent shift in bond markets to deliver a dovish message itself.

That could lead to dip in the rallying Yen, but as the global risk-off shift is expected to continue in 2019, the main safe-haven currency will likely push higher compared to most of its peers next year.

Technical Analysis

EUR/USD, 4-Hour Chart Analysis

The EUR/USD pair will be in the center of attention following the Fed, and a move above the 1.1440 level could finally give way to the bullish seasonality in the pair, although the broader downtrend will most likely continue in the coming months.

The 1.16 level is the main target for such a move, but even a rally to 1.18 would leave the broader trend intact. For now, traders should only enter short-term positions in the pair, due to the conflicting short- and long-term signals, but a stronger bounce would be a good opportunity to short the Euro, as we expect new lows below 1.12 next year.

Gold Futures, 4-Hour Chart Analysis

Gold defied the tentative rally in risk assets today, hitting a new 5-month high against the USD, continuing its recent break-out. The precious metal will likely turn volatile following the Fed decision, but we expect the bullish trend to continue. Key long-term resistance is found near the $1300 level while the $1230-$1235 zone should hold any pullbacks in the metal.

Given the recent trends in stock and bond markets, coupled with the growing stress on the financial system, indicated by the widening credit spreads, the short-term outlook is more and more in line with the bullish long-term fundamentals for gold.

EUR/GBP, 4-Hour Chart Analysis

The pair retested the level of the recent break-out, and today, it’s back above the 0.90 level, and we expect the rally to continue. The Euro could reach and surpass its August highs against the Pound near 0.91 in the coming weeks, even though both currencies are expected to remain weak against the other majors, dud to the slowing economic growth and the continued Brexit uncertainty.

AUD/JPY, 4-Hour Chart Analysis

The Australian Dollar continues to show weakness against its major peers, and we expect that trend to remain dominant given the weakness in China and in global risk assets. The AUD/JPY pair moved below the key support zone between 80.50 and 81 today, and we expect a test of the lows near 78.50 in the coming weeks, and a post BOJ bounce could serve as an ideal entry point on the short side.

Key Economic Events Tomorrow

ChartBook

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

EUR/JPY, 4-Hour Chart Analysis

GBP/JPY, 4-Hour Chart Analysis

USD/CHF, 4-Hour Chart Analysis

USD/CNH, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

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