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FOMC preview: What to expect of EUR/USD?

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 27, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Córdoba) - The Federal Open Market Committee (FOMC) is due to announce its monetary policy decision which will be accompanied by a statement at 19:00 GMT.

    Following December’s “lift-off” the Federal Reserve is expected to maintain the policy unchanged and focus poses on the statement, with investors looking for clues about the path of future hikes.

    The tone of the statement will likely trigger a response in the US dollar. The Fed is broadly expected to play down the prospect of more rate hikes this year, given deteriorating domestic data and turbulence abroad. A dovish stance will likely weigh on the greenback, although some analysts argue that markets may be already positioned for such an outcome and therefore the dollar might in fact benefit.

    Meanwhile, if the Fed sends a strong signal that despite global turmoil, it could possibly raise rates one of two meetings in the future, the US dollar will get a significant boost.

    EUR/USD levels to watch


    As for EUR/USD, a dovish Fed could send EUR/USD to the upside, with next resistances seen at 1.0985 (100-day SMA) and 1.1000 (psychological level) ahead of key level at 1.1050 (200-day SMA).

    On the downside, a not-so-dovish Fed will undoubtedly lift the dollar, pressuring EUR/USD toward immediate supports are seen at 1.0777/70 (Jan 21 & 7 lows) and the 1.0710/00 region (Jan 5 low/psychological level). A break below this latter could pave the way towards the 1.0500/20 zone ahead of 2015 low struck in March at the 1.0460 area.

    To read more about the FOMC preview from our in house Chief Analyst Valeria Bednarik titled “FOMC Preview: focus on the statement”

    Trade Federal Reserve interest rate decision with FXStreet - Live Coverage
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