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EURUSD waiting for the FOMC

Market Analysis
EURUSD

EURUSD, 60 min

With the FOMC decision ahead of the markets are likely to stay on a wait and see mode. This means that EURUSD fluctuating between nearby minor support and resistance levels. Market participants are wary of taking strong views and large positions before they know what the US Fed is likely to decide. We don’t expect a rate hike today due to recent lousy NFP data and the UK’s EU referendum being so close and look for two rate hikes later on this year, with the first one possibly coming in July after UK voters have said no to Brexit.

The last time I was writing about EURUSD I suggested the market should be a sell either at or inside my Sell area of 1.1304 – 1.1320. Market rallied to 1.13027, turned and then moved through both my Target 1 and Target 2 areas.

Currently EURUSD is trending lower in 4h resolution and trading near resistance levels created by Monday’s lows ( 1.1230- 1.1240). If EURUSD manages to close above the resistance area, then it brings the channel high (currently at 1.1270) into play. However, with the FOMC statement ahead of us today markets are likely to be subdued and I’d be surprised if EURUSD started to break resistance levels. Therefore in the intraday picture I expect that the resistances will prevail while volatility will remain low until the FOMC statement. As the resistance has now been rejected I expect the pair to move to 1.1190 – 1.1200 range. In the longer term picture it seems that the USD is getting stronger and provided that the Fed Chair Yellen doesn’t come with any surprises we should see this trend continuing over the coming weeks.

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Janne Muta

Chief Market Analyst

HotForex

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