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The markets were seen trading flat through the day in anticipation of the Federal Reserve announcement. As widely expected, the Fed funds rate was hiked by 25 basis points bringing the interest rates to 2.0% - 2.25%.

The Fed, in its press conference, released the dot plot. According to the forecasts, the central bank is expected to hike interest rates one more time this year and follow through with three more rate hikes next year.

In Sweden, the incumbent Prime Minister Stefan Lofven lost a vote of confidence, putting the political landscape into further confusion. The SEK was muted, but market watchers expect some volatility if there are talks of re-election.

The RBNZ held its monetary policy meeting during the overnight trading session. As expected, the central bank left monetary policy unchanged with the official cash rate steady at 1.75%.

The European trading session today will see the release of the ECB's economic bulletin alongside Germany's preliminary inflation data.

The NY trading session is expected to be busy. The durable goods orders data is planned followed by the final revised GDP figures for the second quarter. No changes are expected as the U.S. Q2 GDP is forecast to remain at 4.2%.

Later in the evening, the ECB President Mario Draghi will be speaking. This is followed by a late speech from the Fed Chair, Jerome Powell.

EUR/USD

Current level - 1.1745

FED's third rate hike failed to provoke a break of the current consolidation range, but my outlook here is already bearish, for a violation of the lower boundary, towards 1.1650.

USD/JPY

Current level - 112.68

The failure at 113.20 signals a bearish bias, for a slide towards 112.40 and 111.65 later on. Crucial on the upside is 113.20.

GBP/USD

Current level - 1.3146

The recent short-lived spike to 1.3210 should be the finale of the corrective pullback above 1.3065 and my outlook here is bearish, for a slide towards 1.2970.

Facebook ticker symbol: $FB short-term Elliott wave view suggests that the decline to $158.26 low ended the cycle from 8/07/2018 peak in primary wave ((1)). The internals of that decline unfolded in 5 waves impulse structure with lesser degree cycles showing the sub-division of 5 waves structure in it’s each leg lower i.e intermediate wave (1),(3) & (5). Above from there, the stock is correcting the cycle from 8/07/2018 peak in primary wave ((2)) bounce.

The internals of that bounce is unfolding as zigzag correction with the sub-division of 5-3-5 swing structure in lesser degree cycles i.e intermediate wave (A) & (C) unfolds in 5 waves and intermediate wave (B) unfolds in any 3 swings corrective sequence. Therefore, the initial rally to $167.25 high ended intermediate wave (A) in 5 waves structure. Where Minor wave 1 ended at $161.76, Minor wave 2 ended at $159.30. Minor wave 3 ended at $166.45 and Minor wave 4 ended at $165.61 low. Then finally, a move higher to $167.25 high ended Minor wave 5 & also completed intermediate wave (A) as well.

Down from there, the pullback $160.07 low ended intermediate wave (B). The internals of that decline also unfolded as zigzag where Minor wave A ended at $160.84. Minor wave B bounce ended at $165.70 and Minor wave C ended at $160.07 low. Up from there, the stock is rallying higher in intermediate wave (C). And already reached the blue box area at $169.15-$174.78 100%-161.8% Fibonacci extension area of (A)-(B). However, shorter cycles suggest another short-term high to take place within that area before getting rejected again looking for a primary wave ((3)) lower ideally or for 3 waves pull back at least. We don’t like buying it.

Facebook 1 Hour Elliott Wave Chart

Market movers today

As the Brexit end-game has started, we have published an update this morning looking at the status of the negotiations, what the possible outcomes are, what the biggest obstacles are and what we expect of the economy and GBP. For details, see Brexit Monitor: Get ready for the end game, 27 September.

The big event today will be Italy publishing growth, debt and deficit projections for 2019. We expect 2019 to land somewhere between 2.0-2.4% of GDP, i.e. not violating EU rules. The budget is likely to include some kind of tax reforms and citizen income, but policies are likely to be phased in only gradually or implemented by tweaking some already existing schemes in order to avoid the deficit breaching EU rules.

Overnight in China, we will get the Caixin PMI manufacturing for September. PMI has held up surprisingly well despite the trade war and sharp decline in stock markets and metal markets. However, we see clear downside risk as other data also points to a slowdown. We expect a decline to 50.3 in September from 50.6 in August.

Overnight in Japan, we will get data releases on the labour market regarding the unemployment rate and jobs/applicants ratio for August. The labour market has turned increasingly tight in recent years and we have seen signs that this is pushing up wages. It will be interesting to see if pressures continue to increase.

Selected market news

The Fed meeting turned out pretty much in line with what we wrote in our preview, as the Fed raised the target range by 25bp to 2.00-2.25% and did not send any new important signals to the markets, supporting our view that the Fed is on autopilot and that neutral is the destination. We believe hikes in December, March and June are quite likely, which would take the Fed funds rate to 3.00%, which is the Fed's long-run estimate of where monetary policy is neither expansionary nor contractionary (increased from 2.875% in the June projections, also not a big surprise). For out take, see FOMC Review: Gradual Fed hikes are set to continue , 26 September. Overnight, Trump repeated that he is 'not happy' with the Fed hikes as they are offsetting his fiscal policy (see Bloomberg ), which the Fed, however, is likely to continue ignoring.

China has announced it will lower tariffs on a range of imports effective from November , as it tries to put pressure on US President Trump by opening up the Chinese markets gradually. This should lower the average tariff rate to 7.5% form 9.6%. We do not expect this to change Trump's strategy short term, as the US economy is strong and optimism is high , and there is still a significant risk that the trade war may escalate further in coming months. For more details on our view on the trade war, see US-China Trade Update, 17 September.

For the 24 hours to 23:00 GMT, the EUR declined 0.14% against the USD and closed at 1.1750.

The US dollar rose against the euro, after the US Federal Reserve (Fed) raised its key interest rate for the third time this year.

The Federal Open Market Committee, in its September monetary meeting, raised its benchmark interest rate by 25 basis points to 2.25%, as widely expected and projected one more hike this year followed by three hikes in 2019. In a statement accompanying the decision, the central bank maintained its optimistic view on the steady growth of economy and a strong job market. Further, the officials upgraded their outlook for the US economic growth. The policymakers now expect the economy to grow by 3.1% in 2018, up from previously estimated 2.8% and 2.5% in 2019 from 2.4%. Meanwhile, the central bank dropped its previous assurances that policy was “accommodative”.

In the US, data showed that the new home sales rebounded 3.5% on a monthly basis to a level of 629.0K in August, less than market expectations of 630.0K. In the previous month, new home sales had registered a revised level of 608.0K. Moreover, the nation’s MBA mortgage applications rose 2.9% on a weekly basis in the week ended 21 September 2018. Mortgage applications had registered a gain of 1.6% in the previous week.

In the Asian session, at GMT0300, the pair is trading at 1.1748, with the EUR trading slightly lower against the USD from yesterday’s close.

The pair is expected to find support at 1.1717, and a fall through could take it to the next support level of 1.1685. The pair is expected to find its first resistance at 1.1789, and a rise through could take it to the next resistance level of 1.1829.

Going ahead, traders would closely monitor the Euro-zone’s consumer confidence, economic confidence and business climate indicator, all for September, along with Germany’s Gfk consumer confidence for October and the consumer price index for September, set to release in a few hours. Later in the day, the US advance goods trade balance, durable goods orders and pending home sales, all for August followed by the 2Q gross domestic product figures and initial jobless claims will garner significant amount of investors’ attention.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the GBP declined 0.06% against the USD and closed at 1.3171.

On the macro front, UK's BBA mortgage approvals eased to a level of 39.40K in August, more than market expectations for a fall to a level of 39.56K. The BBA mortgage approvals had registered a revised reading of 39.62K in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.3151, with the GBP trading 0.15% lower against the USD from yesterday's close.

The pair is expected to find support at 1.3120, and a fall through could take it to the next support level of 1.3089. The pair is expected to find its first resistance at 1.3200, and a rise through could take it to the next resistance level of 1.3249.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.19% against the JPY and closed at 112.77.

In the economic news, Japan's final machine tool orders climbed 5.1% on an annual basis in August. In the previous month, machine tool orders had risen 13.1%, while preliminary figures had indicated an advance of 5.3%.

In the Asian session, at GMT0300, the pair is trading at 112.81, with the USD trading a tad higher against the JPY from yesterday's close.

The pair is expected to find support at 112.58, and a fall through could take it to the next support level of 112.35. The pair is expected to find its first resistance at 113.09, and a rise through could take it to the next resistance level of 113.37.

Looking ahead, investors would keep an eye on Japan's jobless rate, retail trade, large retailers' sales and industrial production data, all for August, slated to release overnight.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

Daily Pivots: (S1) 1.1712; (P) 1.1755; (R1) 1.1785; More.....

EUR/USD's decline and break of 1.1723 minor support is the first signal that corrective rise from 1.1300 has completed. That came after meeting strong resistance from 38.2% retracement of 1.2555 to 1.1300 at 1.1779 as we expected. Intraday bias is turned back to the downside for 1.1525 support first. Break will confirm this bearish case and target a test on 1.1300 low. On the upside, again, sustained break of 1.1779 will dampen our view and extend the rise from 1.1300.

In the bigger picture, a medium term bottom should be in place at 1.1300, on bullish convergence condition in daily MACD and some consolidations would be seen. But still, note that EUR/USD was rejected by 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. That carries some long term bearish implications. Thus, we'd expect fall from 1.2555 high to resume after consolidation completes. Below 1.1300 should send EUR/USD through 61.8% retracement of 1.0339 to 1.2555 at 1.1186. And, in that case, EUR/USD would head to retest 1.0339 (2017 low).

For the 24 hours to 23:00 GMT, the USD slightly rose against the CHF and closed at 0.9652.

In the Asian session, at GMT0300, the pair is trading at 0.9660, with the USD trading 0.08% higher against the CHF from yesterday’s close.

The pair is expected to find support at 0.9622, and a fall through could take it to the next support level of 0.9584. The pair is expected to find its first resistance at 0.9700, and a rise through could take it to the next resistance level of 0.97400.

Amid lack of economic releases in Switzerland today, traders would focus on global macroeconomic events for further direction.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.66% against the CAD and closed at 1.3040.

In the Asian session, at GMT0300, the pair is trading at 1.3041, with the USD trading slightly higher against the CAD from yesterday’s close.

The pair is expected to find support at 1.2975, and a fall through could take it to the next support level of 1.2909. The pair is expected to find its first resistance at 1.3077, and a rise through could take it to the next resistance level of 1.3113.

Trading trend in the Loonie today is expected to be determined by Canada’s CFIB business barometer for September, set to release in a few hours.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.