The big event of the week is the FOMC minutes from February’s policy meeting that will be published on Wednesday at 19:00 GMT. As the meeting held on February 1st was not accompanied by a press conference of review of the forecasts. Fed Chair Janet Yellen’s testimony last week was very optimistic leading traders to expect an increase of the borrowing costs soon and the minutes may be one more confirmation. More specifically, Yellen stated if employment and inflation continue to improve, as we expect, we may have a rate hike in the upcoming meetings. Let’s wait and see tomorrow, what the policymakers discussed to have a better picture of what to expect.
EUR/USD – Technical Outlook
Euro was moved sharply lower versus the U.S. dollar during Tuesday’s trading session as it plunged more than 0.7% in less than one day. The EUR/USD pair rebounded on the 1.0680 resistance level which overlaps with the 100-daily SMA last Thursday and now is approaching the significant 1.0500 – 1.0520 support zone. Traders prepare themselves ahead the FOMC minutes tomorrow and the price slipped below a strong level at 1.0590. Moreover, if the common currency pair falls below the aforementioned zone, it would be exposed to the 1.0450 key level.
From a technical point of view, the price is developing well below the three moving averages (50, 100 and 200 SMAs) on the 4-hour chart whilst the technical indicators are following a bearish path. The RSI indicator edged lower following the bounce off the 50 level and has just entered the oversold area. The MACD oscillator plummeted below its trigger and zero lines with strong momentum.
U.S. Dollar Index – Technical Outlook
The ICE U.S. Dollar Index (.DX_H7), which tracks the U.S. dollar against a basket of six major rival currencies, is moving upwards since it bounced off the 99.20 support barrier and surged more than 2%. During last week, the index recorded a fresh one-month high at 101.70 and then lost some of its solid gains. On Tuesday, the price opened with a gap to the upside and rose almost 0.5% while it surpassed the 101.00 strong psychological level.
On the 4-hour chart, the index jumped above the three SMAs (50, 100 and 200 SMAs) and currently is moving towards the aforementioned new high. If the price climbs above the latter level, it would open the way for the 102.50 resistance barrier. The RSI indicator failed to enter the overbought area but is still moving the positive path. The MACD oscillator had a bullish crossover with its trigger line over the previous periods which is indicating an upward momentum. The markets expect a hawkish Fed in the FOMC meeting minutes on Wednesday and traders may push the index further up.
