The U.S. Dollar extended its strength against other major currencies on Friday as the market awaits the FEDs rate statement. On Wednesday, Nov. 3, 2021, the FEDs will be releasing their rate statement and begin to execute their plan to ease bonds and securities buying. Although, the plan is to start increasing interest rates by 2022 and start tapering by November 2021. This is according to the statement that was released on Sep. 22, when the interest rate was left unchanged at <0.25%.
The surge in the value of the US Dollar last Friday has placed a lot of concerns on the market. The U.S. Dollar currency index rallied to 94.180 after picking support from 93.400.
EURUSD and GBPUSD prices got rejected from the resistance area as prices crashed really hard from 1.16857 and 1.3800 respectively. EURUSD rallied shortly from 1.15850 to 1.16857 on Thursday, before the price crashed back to 1.15352 on Friday, thereby erasing all the previous gains that were made during the week. GBPUSD also rallied shortly to 1.3800 on Thursday after the price removed the 1.3750 support on Wednesday. The short rally back to 1.3800 on Thursday was the second time the price of GBPUSD touched the 1.3800 resistance level before the crash on Friday. The crash erased all the gains for the week as the price closed below Wednesday's low, creating a new low of 1.36682.
USDCHF and USDCAD also picked support from 0.91075 and 1.23010 respectively. While USDJPY continued to extend its growth as the price rose from 113.255, its weekly low, to 114.100.
If the Feds starts tapering this November, the U.S. Dollar might continue to strengthen against other currencies. This might drive some pairs to make some historical lows and highs. EURUSD for example will make a new brand new low for the year as the price keeps falling. Technical analysis is also supporting a new low for EURUSD as the price is currently trading below the 200 EMA on the weekly timeframe. While USDCHF, on the other hand, will keep rising as price found support on the daily timeframe. The current trend on the daily timeframe is coming to an end as the fifth wave has been completed. A break above 0.92000 will see the price of USDCHF rally back to 0.93000 or beyond.
The U.S. Dollar might also continue to extend its growth against the Japanese Yen as the price of USDJPy is approaching its highest price for the first time since 2018.
The NFP data will also be released on Friday, Nov. 6, and the forecast, 397K, is higher than the previous data, 194K. Things are lining up pretty well for USD this coming week.
Easing bonds and securities buying by the Feds is a result of the increasing inflation in the US. POTUS, Joe Biden, made a proposition to tax the Billionaires more than they are currently paying is still under debate as some senators reject the idea.
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