Pressured EUR/USD Braces For FOMC
FOREX.com | Nov 01, 2017 15:33
Though markets are not at all expecting the US Federal Reserve to make any substantive changes to monetary policy this afternoon when the FOMC meeting concludes, the general expectation is that the Fed will lean towards a more hawkish stance, potentially reinforcing the high likelihood of a December interest rate hike as well as further rate hikes and balance sheet reduction through next year. These expectations, coupled with the anticipation of a new Fed Chair to be appointed by President Trump possibly on Thursday, have helped to prop up the US dollar just as the euro has continued to be pressured due in part to a dovish European Central Bank last week.
Ahead of the Fed decision and statement on Wednesday afternoon, the US dollar has remained well-supported while the euro has generally remained weighed down. This has now placed the EUR/USD currency pair at a precarious juncture just above the 1.1600 handle. Previously, EUR/USD had already broken down below a large head-and-shoulders bearish pattern last week in the aftermath of the ECB decision. The pair has since settled just above the noted 1.1600 support area, now forming what could turn out to be a bearish inverted flag pattern in the process.
If the Fed indeed sounds a more hawkish tone on Wednesday, the statement could prompt a continued dollar surge that triggers a further breakdown for EUR/USD. Other key upcoming events, including Trump’s impending Fed Chair appointment as well as the highly anticipated US tax reform bill, could also trigger a substantial dollar move. With such a move, a significant dollar-driven EUR/USD breakdown below 1.1600 support could open the way towards the next major support level to the downside around the 1.1450 price area.
Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Get The App
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.