DAX, FTSE 100 AND DOW JUMP AHEAD OF FOMC DECISION
European stocks and American futures rebounded after a positive statement by Evergrande. In a statement to the press, the company said that it had resolved interest payments for onshore bonds due this week. However, the company did not offer more details about when it will pay these loans. Also, it did not offer clear guidance on how it will pay its international bonds due on Thursday. Therefore, there is a possibility that the company will still default on those dollar-denominated bonds. US stocks also reacted to the mixed financial results by Adobe, FedEx, and Walt Disney.
The FTSE 100 index also rallied as interest in UK companies continued. In a statement on Tuesday, DraftKings, an American company, said that it would spend about $20 billion to acquire Entain. This was a notable announcement since DraftKings is worth about $21 billion. The new bid comes at a time when other UK companies have been targeted by American companies. Some of these firms are Meggitt, Avast, and Morrison’s. Therefore, analysts expect that more companies will become acquisition targets soon.
The US dollar held steady against key currencies ahead of the Fed decision. The central bank is expected to leave its current monetary policy tools intact. The key mover will be the Fed’s guidance about the future. For example, the dot plot will provide a clear picture about when the bank will hike rates. Similarly, the bank will likely provide guidance about when it will start tapering its asset purchases. Meanwhile, the US will publish its existing home sales numbers a day after it released strong housing starts and building permits data.
EURUSD
The EURUSD pair has been in a tight range in the past two days. On the four-hour chart, the pair has formed a bearish flag pattern. In price action analysis, this pattern is usually a bearish signal. The pair is slightly above the Parabolic SAR and along the middle line of the Bollinger Bands. The Relative Strength Index (RSI) has moved slightly above the oversold level. Therefore, the pair will likely breakout lower ahead or after the Fed decision.
USDCHF
The USDCHF pair declined to a low of 0.9220, which was the lowest level since September 16. On the four-hour chart, the pair moved below the important support level at 0.9232, which was the highest level in August. The pair has also moved below the 25-day and 50-day moving averages and formed a small head and shoulders pattern. It will likely keep falling ahead of the Fed and Swiss National Bank (SNB) decision.
SPX500
The S&P 500 index futures rose to $4,370, which was substantially higher than this week’s low of $4,302. On the four-hour chart, the index moved above the key resistance level at $4,350. It also seems like it is forming a bearish consolidation pattern. It has moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved from the oversold level. The index will likely resume the downward trend today.
