In a few hours, the two-day FOMC meeting will end and policymakers are strongly expected to raise rates for the first time in 2017! According to the FedWatch Tool of CME Group, Fed will potentially rise its funds rate to 0.75% from 0.50%, by 91%. The majority of traders believe that this rate hike has already priced-in in the market, as we do, though we expect volatility due to the Fed economic projections and Fed Chair Yellen’s speech right after the interest rate decision announcement. Traders are eager to learn the pace of rate hikes in the next year. A hawkish stance from Yellen’s size and a positive stance for economy’s improvement could boost the dollar significantly. Though, if Yellen appears to be extremely cautious and speaks for external risks and downward pressure, we may see losses coming over the USD long position, which is less likely.
EUR/USD - Technical Outlook
The most traded currency – the EUR/USD pair – edged higher, 0.8% since Monday, and is ready to snap a positive day. Today, the Fed will decide if will raise rates so traders must be very cautious during the FOMC meeting. On the 4-hour chart, the pair is developing between the 50 and 100 SMAs and is moving towards the 1.0700 strong barrier, as it is on its way to penetrate the 50-SMA. On the other side, a break below the previous eight-month low at 1.0505 will plunge the price near the 1.0460 strong support level. Technical indicators seem to be in agreement with the bullish thought as the RSI is pointing upwards and lies above the 50 level. The MACD oscillator lies above its trigger line but is still moving below the neutral area.
