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US Dollar Outlook: USD Price Action Focused on Fed Meeting

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USD PRICE OUTLOOK: US DOLLAR EYES UPCOMING FED MEETING

  • USD value motion declines broadly as FX merchants await the September Fed assembly
  • The Fed may reignite US Dollar weak spot if central financial institution officers echo dovish leanings
  • EUR/USD and GBP/USD may spur US Dollar volatility amid renewed Brexit drama

The US Dollar appears to be like positioned to take the new seat this week in gentle of the September Fed assembly on faucet. USD value motion is trading defensively headed into the Federal Reserve announcement scheduled to cross market wires this Wednesday, September 16 at 18:00 GMT.

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DXY INDEX – US DOLLAR PRICE CHART: DAILY TIME FRAME (20 APR TO 14 SEP 2020)

dxy index price chart us dollar outlook september fed meeting

Chart created by @RichDvorakFX with TradingView

The DXY Index looks as if it desires to renew its bearish pattern developed for the reason that broad-based US Dollar peaked in Might. USD value motion has potential to weaken additional if FOMC officers conform to echo the established order of accommodative financial coverage and unfastened monetary circumstances.

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The Fed may weigh negatively on the US Dollar if the central financial institution reiterates its dedication to holding markets flush with liquidity and letting inflation run sizzling. However, the Dollar has potential to catch a bid if the September Fed assembly prompts threat aversion and causes the S&P 500 VIX Index to rise sharply.

USD PRICE OUTLOOK – US DOLLAR IMPLIED VOLATILITY TRADING RANGES (1-WEEK)

USD price chart us dollar outlook implied volatilty trading ranges september 2020 fed meeting

Regardless of the Fed assembly on deck this week, anticipated US Dollar currency volatility is comparatively muted. That is indicated by 1-week US Dollar implied volatility readings clocked as of Friday’s shut, which look low when contemplating potential occasion threat surrounding a scheduled central financial institution determination. Broadly talking, this may recommend that FX choices merchants anticipate subdued motion within the US Dollar across the FOMC assertion this week.

GBP/USD implied volatility is predicted to be essentially the most risky main currency pair this week with an implied volatility studying of 12.7%, which compares to its 20-day common studying of 8.9% and ranks within the prime 90th percentile of measurements taken over the past 5 years.

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Potential for heightened market exercise within the Pound-Dollar largely surrounds the newest Brexit drama and upcoming Fed assembly. Choices-implied trading ranges are calculated utilizing 1-standard deviation (i.e. 68% statistical chance value motion is contained inside the implied trading vary over the required time-frame).

Preserve Studying: Gold Price Eyes Bullish Breakout as USD Drops Forward of FOMC

— Written by Wealthy Dvorak, Analyst for DailyFX.com

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