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FX.co ★ 22.09.2021: USD to strengthen growth? Outlook for EUR/USD and GBP/USD.

22.09.2021: USD to strengthen growth? Outlook for EUR/USD and GBP/USD.

Market participants are waiting for the results of the FOMC meeting. Thus, there is no wonder that currencies are trading sideways. It is almost obvious that stagnation will continue until the publication of meeting results and the end of the press conference. There are two possible scenarios. According to the first one, the US Fed may announce a gradual tapering of the QE program from November. The regulator has been providing markets with hints for two months already. If the prediction comes true, the greenback may resume gaining in value, as its supply in the market will drop. The magnitude of the QE tapering does not matter, as this will influence only the US dollar growth. The second scenario is slightly different, but the key idea is the same. The Fed may take the decision at the next meeting in November. In this case, the US dollar will decline. Notably, a rise in the pound sterling will be insignificant, as tapering of the QE program is inevitable. The Fed’s representatives have repeated this idea several times already. Even those, who were against this measure, have changed their mind. Market participants will simply have more time to prepare for the upcoming changes. Let us take a look at the trading charts. Yesterday, the euro managed to recoup some of its losses against the US dollar. The pair inched up by 40 pips to trade at 1.1700. However, the rise was replaced by stagnation as the downward movement is still in force. Thus, the pair is hovering around 1.1700. It is quite possible that a news flow may boost speculative activity. In this case, the readings of 1.1700 and 1.1750 act as signal levels. If the price fixes beyond either level, it will be easier to indicate a further movement. At the same time, the pound/dollar pair slackened near the level of 1.3640. As a result, the pair advanced, but then got stuck between 1.3640 and 1.3690. Although the British pound is significantly oversold, the market sentiment remains bearish. This is proved by several technical factors: the absence of correction, a slowdown, and a rise in the volume of short positions. Market participants are likely to ignore the oversold conditions. That is why the pound/dollar pair may slide to 1.3600-1.3571.

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*El análisis de mercado publicado aquí está destinado a aumentar su conocimiento, pero no a dar instrucciones sobre cómo realizar una operación
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