FOREX NEWS: FED RATE AND PRESS CONFERENCE: THE MARKET REACHES A BOILING POINT
EUR/USD
Forex News: Yesterday the pair completed a retracement that reached the 50 period Exponential Moving Average and soon after, it started to descend. No major advances were made and price returned below 1.1185.
Technical Outlook
The 50 period EMA offered good resistance yesterday and pushed price lower almost immediately after being touched. This shows us that the bears are in control of short term price action and strengthens our view that 1.1150 support will be touched or even broken in the near future. The oscillators are no longer oversold so the pair is free to move to either side but today we have a cluster of Fed announcements and these will be the main market mover.
Fundamental Outlook
At 6:00 pm GMT the Fed will announce the interest rate which is not expected to change from the current <0.50% and at the same time the FOMC will release a Rate Statement, detailing the reasons that determined the rate vote.
Also at 6:00 pm GMT the FOMC Economic Projections come out, containing economic growth and inflation expectations for the next 2 years. Half an hour later, Fed Chair Janet Yellen will hold a press conference discussing the rate decision and answering journalists’ questions; usually this is the most volatile time of the day because the US Dollar is very responsive to Yellen’s attitude and answers. Often price movement is irregular as traders around the world try to interpret her words, thus caution is recommended.
GBP/USD
After a brief pullback to the upside, the pair continued its travel south and broke the support at 1.3000. This is an important victory for the bears, which solidifies their medium term control and opens the door for additional downside movement.
Technical Outlook
It seems like the next medium term target is the support located around 1.2880 but we must note the oversold condition of both the Stochastic and the Relative Strength Index. This means that we may see a move back up, towards the recently broken 1.3000 but today’s price direction will be mainly decided by the U.S. events so the technical aspect will be secondary to the fundamental.
Fundamental Outlook
The economic calendar doesn’t hold any Pound-affecting indicators today but the Fed meeting and rate announcement will have a direct and strong impact on the pair’s movement.