Forex Markets Poised for Central Bank Announcements
The foreign platform market is entering a pivotal phase as traders await a series of major central bank decisions. Yesterday, the U.S. Federal Reserve trimmed the Federal Funds Rate from 4.25% to 4.00%, while Chair Jerome Powell’s cautious comments reduced the odds of additional rate cuts in the near term. At the identical time, other key monetary authorities are shaping the global currency landscape, according to Forex Factory:
→ Bank of Canada – The BoC cut its benchmark interest rate from 2.50% to 2.25%, matching forecasts. In its accompanying statement, policymakers cited fragileer GDP growth, “ongoing softness in the economy”, and potential risks linked to U.S. tariffs and trade disputes.
→ Bank of Japan (BoJ) – Japan’s central bank left rates unchanged but suggested it could raise borrowing costs if economic data permit. This has led markets to speculate about a possible rate increase as ahead as December.
→ European Central Bank (ECB) – The ECB is widely expected to keep its deposit rate steady, with an official announcement scheduled for 16:15 GMT+3 today.
→ Looking ahead, the Reserve Bank of Australia and the Bank of England will deliver their own policy decisions next week, further shaping FX sentiment.
Given these developments, market attention has turned to the U.S. Dollar Index (DXY) as traders assess the next potential move.
Technical Overview of the DXY Chart
Our analysis on 19 September identified several significant technical elements on the DXY chart:
→ The primary descending channel (highlighted in red) remains intact, segmented into quarters by the QL and QH lines.
→ A rebound from the lower QL boundary signalled potential bullish momentum.
→ We anticipated a short-term recovery phase.
Since then, the index has maintained its upward bias, with price action testing the upper channel resistance around 10 October — an area that once again proved hard for purchaviewrs to overcome.
At present, the DXY is consolidating within a tightening triangle pattern.
→ The upper boundary corresponds to the resistance of the long-term descending channel that has guided price movements through 2025.
→ A shorter-term ascending channel from the September low remains active.
This configuration reflects both a balance of forces between purchaviewrs and tradeers and uncertainty about the dollar’s longer-term trajectory.
With key central bank meetings, the ongoing U.S. government shutdown, and global geopolitical tensions all in play, a breakout from this pattern could signal the begin of a new directional trend that may extend over the coming weeks or months.
Following the Fed’s latest decision, the greenback gained momentum, breaking above a short-term Bullish Flag pattern (marked in blue) — a move that strengthens the case for continued upside in the near term.
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