Monday, June 17, 2024

EURUSD maintains volatile trading, awaiting guidance from the Fed’s decision

Huitong Finance APP News – Market participants are preparing for the Federal Open Market Committee meeting scheduled to be held on Wednesday, and the dovish sentiment of the Federal Reserve has taken over. Many traders choose to close short positions in anticipation of increased volatility during the FOMC announcement and during the post-announcement press conference.

While rates are widely expected not to rise this week, focus has shifted to the language and tone of the FOMC statement, which could have more impact than the actual rate decision itself. The market generally believes that the United States will eventually raise interest rates again. However, the current dilemma revolves around whether they will maintain their hawkish currency stance in the long term.

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Technically, the 1.08 level is imminent and it looks like this is an area that will provide significant resistance, especially with the 200-day EMA sitting around this area. A successful break above this level could pave the way for a move higher. However, the market remains prone to weakness, which could put downward pressure. The general strength of the U.S. dollar and gradually rising interest rates have contributed to these downward trends. It is important to keep a close eye on the short end of the yield curve as it is expected to be the fulcrum for market movements.

A break below the low recorded in last Thursday’s candle could lead to a test of the 1.06 level and possibly even a pullback to the 1.05 level. While this scenario remains a distinct possibility, patience and caution will be crucial as the market’s trajectory evolves. Judging from these forecasts, it is possible that this market may be seen as offering selling opportunities. However, given the expected volatility in Washington, D.C., during Wednesday’s trading session, it might be wise to wait until the end of the day before committing large amounts of money to trading.

Ultimately, the euro’s recent rally amid dollar volatility sets the stage for an eventful week ahead, with the FOMC meeting taking center stage. While markets don’t anticipate an immediate rate hike, the wording of the FOMC statement is expected to have a significant impact on market sentiment.

Technical resistance is at 1.08, a cautious approach is recommended. A break below could lead to a test of lower support, highlighting the importance of a prudent trading strategy in the face of potential market volatility.

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