The USD knee jerk is to the downside after Fed cuts by 50 bps

The initial reaction on the 50 basis point rate Is for the US dollar to move lower:

• USDJPY. The USDJPY moved to a low of 140.76. That was within five pips of the swing low from last Wednesday’s trading day. The price is currently trading below its 100-hour moving average above at 141.09 at 140.98. The 100 hour MA is a close risk and bias defining level level. Move above that and the 200 hour MA at 141.89 could be eyed. On the downside, the 140.248 is the swing low from end of December 2023. Move below that level and the low from earlier this week becomes the next target at 139.57 (with 140.00 a natural level that may give sellers some cause for pause).

• EURUSD: The EURUSD moved above swing area between 1.1131 and 1.11399 (close risk level now for the buyers). The high price is extending above the swing high from August 21 at 1.1172. The swing high from August 27 at 1.11897 and the double top near 1.1200 from August 23 and August 26 are the upside target to get to and through to increase the bullish bias. Above that and the 61.8% retracement of the move down from the January 2021 hi comes in at 1.12709.

• GBPUSD: The GBPUSD is trading to a new high going back to March 2022. The high price on March 23, 2022 reached 1.32977. Extend above that level and the swing low from January 27 comes in at 1.3357.

Looking at the hourly chart, the close risk is at 1.32659 and then down to 1.3221 and 1.3230.

• USDCHF: The USDCHF Is moving below a swing area between 0.8399 and 0.84087. Staying below those levels would keep the sellers firmly in control. Move above, and the earlier low for the day at 0.8423 would be targeted.

Looking at the US stock market as Chair Powell speaks has:

• Dow industrial average up 186 points or 0.43% at 41783
• S&P index up 28 points or 0.50% at 5663.83
• NASDAQ index is up 160 points or 0.92% at 17799.

Markets projects 62% chance of 25 bps in November and 95% of 50 in December. That would be 125 basis points. The Fed projected 100 bps of cuts between now and the end of year.

This article was written by Greg Michalowski at www.forexlive.com.