The Federal Reserve’s latest policy meeting will come to a close this afternoon, and the release of their policy statement at 14:15 ET poses significant event risk for the US dollar today.
The Federal Reserve’s latest policy meeting will come to a close this afternoon, and the release of their policy statement at 14:15 ET poses significant event risk for the US dollar today. The FOMC is widely expected to leave the fed funds target range at 0.0 percent - 0.25 percent, and this should remain the case throughout much of the year. In fact, the FOMC started saying in January that they continue “to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time,” and they went on to say something similar in March and April. Furthermore, the last statement highlighted that the Committee’s policy focus is to support the functioning of financial markets via QE and other measures that are likely to keep the size of the Federal Reserve’s balance sheet at a high level, but offered no indications that they plan on expanding these programs. As long as we see these sorts of statements continue to be published the news shouldn’t be too market-moving, which is essentially what we saw on April 29 when most of the day’s price action actually occurred prior to 14:15 ET.
However, the statement could send the US dollar spiraling lower if the FOMC says they will expand their QE efforts, similar to what we saw upon the Fed’s initial QE announcement on March 18.
Looking to hourly EUR/USD charts, there’s a clear cluster of resistance between 1.4100 and 1.4150 that has stopped past rallies in the pair from making any headway. At the same time, the break from a recent consolidation within a large wedge was quite bullish, but that doesn’t mean we won’t see a test of the trendline that once served as resistance at 1.3950, which should now offer some support.
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