USD/COP retakes the 100-day SMA, bears still in command

The USD/COP sharply rose on Tuesday, mainly driven by a cautious market mood ahead of the Federal Reserve (Fed) and the Colombian central bank decisions on Wednesday and Thursday.

On the US side, markets have already discounted a pause, but investors are looking for further clues on the Fed’s plan for the December meeting to take on their next positions. As for now, the CME FedWatch tool suggests that the odds of a hike in the last meeting of 2023 are low, but the policy statement and Chair Powell’s presser will likely impact those expectations. 

Recent indicators reported that the US economy is doing better than expected, which will probably give the Fed officials reasons to leave the door open to hiking agains. Job creation has slightly decelerated, but the economic activity remains strong, which gave the Greenback traction in the last sessions. 

On the COP’s side, markets are also discounting a pause in Thursday’s quarterly report from the Colombian Central Bank, holding rates at 13.25%. In the last meeting, the bank sounded hawkish and considered that its wasn’t prudent to consider cutting rates due to the recent economic data. In the meantime, swaps markets are discounting higher odds of the easing cycle to start next December.

USD/COP Levels to watch 

 According to the daily chart, the technical outlook for the USD/COP remains neutral to bearish, as despite the bulls gaining ground, the bears are in command. The Relative Strength Index (RSI) shows an upward trend below its midline, suggesting a potential resurgence of bullish strength, while the Moving Average Convergence (MACD) prints neutral red bars.

In the larger context, the pair is below the 20 and 200-day Simple Moving Averages (SMAs), and if the bulls hold above the 100-day average, the buyers may have some hope of stopping the recent bearish momentum.

 Support levels: 4096.7 (100-day SMA), 4045.7,4027.3.

 Resistance levels: 4147.8,4175.5, 4190.9.

USD/COP Daily Chart