EUR/USD FOMC statement possibilities, how can affect the price?
In this post I will mention what possibilities could be announced in FOMC and how it can affect the price action?
1- FED delay taper, mention the word transitory, premature, does not give an accurate date when would it be >>
- THAT WOULD MEAN INFLATION WOULD RUN HOTTER THAN IT IS ALREADY -
- DOVISH FOR LONGER PERIOD -
- BOTH PREVIOUS POINTS COMBINED ARE VERY NEGATIVE FOR USD APPRECIATION -
- PRICE RANGE WOULD BE 1.1750-1.1950 -
- BREAK ABOVE 1.1850 WOULD OCCUR IN THE INTRADAY TRADING -
- PROBABILITY 90% -
2- FED shows concerns about rising inflation, mentions taper announcement to take action at least by end of the year >>
- THAT WOULD NOT ONLY STOP THE RISING INFLATION BUT ALSO MAY CAUSE ASCENDING DEFLATION -
- USUALLY TAPER TO BE FOLLOWED BY HAWKISH CENTRAL BANK -
- PRICE RANGE WOULD BE 1.1650-1.1850 -
- BREAK BELOW 1.1750 WOULD OCCUR IN THE INTRADAY TRADING -
- POSSIBILITY 10% -
SPOTLIGHTS
- DESPITE THAT RECENT FUNDAMENTALS SIGN FOR A SLOWER PACE IN THE U.S. ECONOMIC RECOVERY (DROP IN EMPLOYMENT AND DATA ), IT IS WISE TO KNOW THAT MONETARY AND FISCAL POLICY HOLD 90% OF THE CURRENCY EXCHANGE RATE VALUE -
- LONG POSITIONS SHALL BE IMMEDIATELY SHIFTED TO SHORT IN CASE SECOND POSSIBILITY HAPPENS -
- DESPITE THE 10% OF THE SECOND POSSIBILITY BUT IT IS STILL THE FAVORED ONE ACCORDING TO ECONOMISTS SENTIMENT -
RECENT FUNDAMENTAL KEY QUOTES
1- ECB policy updates ( will persist with ultra loose stimulus until it has solid evidence it can sustainably hit its new inflation goal of 2% ) ( THIS MEANS POLICY MAKERS CAN KEEP RATES AT A RECORD LOW FOR LONGER AND EXTEND ITS BOND BUYING, WON'T NECESSARILY REACT IMMEDIATELY IF INFLATION OVERSHOOTS THEIR TARGET FOR A PERIOD )
2- EU virus update ( ECB mentioned the pandemic "continues to cast a shadow" and there is a long way to go on the record to recovery ) ( HOWEVER STILL NEW CASES ARE MUCH LESS THAN IN U.S. AND ALSO THE INOCULATION PACE IS FASTER SPECIALLY IN ITALY AND FRANCE AFTER RESTRICTING MANY LEISURE ACTIVITIES FOR CITIZENS WHO ARE NOT VACCINATED OR WHO HAVE RECENTLY TESTED NEGATIVE ).
3- FED policy update ( economic recovery still hasn't progressed enough to begin scaling back asset purchases, as the labor market still has a "long way to go", inflation is likely to remain high in coming months before moderating" ) ( THE RISE IN INITIAL JOBLESS CLAIMS AND THE MIXED U.S. DATA, IN ADDITION TO THE CLEAR RISE IN NEW POSITIVE COVID-19 CASES WILL MAKE IT HARDER ON THE FED TO ANNOUNCE AN EARLY TAPER OR RATE HIKES ).
4- U.S. virus update ( the rise in covid-19 cases is showing no signs of abating, particularly in U.S. states where low vaccination rates fueled up an uptick as the delta variant proliferates and hospital beds resume filling up, the U.S. 7 day average topped 40 ,000 for the first time since early May, and cases have more than tripled since the beginning of the month ).
- THIS OUTLOOK REMAINS ONLY TILL UPCOMING NEWS AND DATA THAT MAY CHANGE THE PRICE RANGE, SO I WILL UPDATE ACCORDINGLY -
1- FED delay taper, mention the word transitory, premature, does not give an accurate date when would it be >>
- THAT WOULD MEAN INFLATION WOULD RUN HOTTER THAN IT IS ALREADY -
- DOVISH FOR LONGER PERIOD -
- BOTH PREVIOUS POINTS COMBINED ARE VERY NEGATIVE FOR USD APPRECIATION -
- PRICE RANGE WOULD BE 1.1750-1.1950 -
- BREAK ABOVE 1.1850 WOULD OCCUR IN THE INTRADAY TRADING -
- PROBABILITY 90% -
2- FED shows concerns about rising inflation, mentions taper announcement to take action at least by end of the year >>
- THAT WOULD NOT ONLY STOP THE RISING INFLATION BUT ALSO MAY CAUSE ASCENDING DEFLATION -
- USUALLY TAPER TO BE FOLLOWED BY HAWKISH CENTRAL BANK -
- PRICE RANGE WOULD BE 1.1650-1.1850 -
- BREAK BELOW 1.1750 WOULD OCCUR IN THE INTRADAY TRADING -
- POSSIBILITY 10% -
SPOTLIGHTS
- DESPITE THAT RECENT FUNDAMENTALS SIGN FOR A SLOWER PACE IN THE U.S. ECONOMIC RECOVERY (DROP IN EMPLOYMENT AND DATA ), IT IS WISE TO KNOW THAT MONETARY AND FISCAL POLICY HOLD 90% OF THE CURRENCY EXCHANGE RATE VALUE -
- LONG POSITIONS SHALL BE IMMEDIATELY SHIFTED TO SHORT IN CASE SECOND POSSIBILITY HAPPENS -
- DESPITE THE 10% OF THE SECOND POSSIBILITY BUT IT IS STILL THE FAVORED ONE ACCORDING TO ECONOMISTS SENTIMENT -
RECENT FUNDAMENTAL KEY QUOTES
1- ECB policy updates ( will persist with ultra loose stimulus until it has solid evidence it can sustainably hit its new inflation goal of 2% ) ( THIS MEANS POLICY MAKERS CAN KEEP RATES AT A RECORD LOW FOR LONGER AND EXTEND ITS BOND BUYING, WON'T NECESSARILY REACT IMMEDIATELY IF INFLATION OVERSHOOTS THEIR TARGET FOR A PERIOD )
2- EU virus update ( ECB mentioned the pandemic "continues to cast a shadow" and there is a long way to go on the record to recovery ) ( HOWEVER STILL NEW CASES ARE MUCH LESS THAN IN U.S. AND ALSO THE INOCULATION PACE IS FASTER SPECIALLY IN ITALY AND FRANCE AFTER RESTRICTING MANY LEISURE ACTIVITIES FOR CITIZENS WHO ARE NOT VACCINATED OR WHO HAVE RECENTLY TESTED NEGATIVE ).
3- FED policy update ( economic recovery still hasn't progressed enough to begin scaling back asset purchases, as the labor market still has a "long way to go", inflation is likely to remain high in coming months before moderating" ) ( THE RISE IN INITIAL JOBLESS CLAIMS AND THE MIXED U.S. DATA, IN ADDITION TO THE CLEAR RISE IN NEW POSITIVE COVID-19 CASES WILL MAKE IT HARDER ON THE FED TO ANNOUNCE AN EARLY TAPER OR RATE HIKES ).
4- U.S. virus update ( the rise in covid-19 cases is showing no signs of abating, particularly in U.S. states where low vaccination rates fueled up an uptick as the delta variant proliferates and hospital beds resume filling up, the U.S. 7 day average topped 40 ,000 for the first time since early May, and cases have more than tripled since the beginning of the month ).
- THIS OUTLOOK REMAINS ONLY TILL UPCOMING NEWS AND DATA THAT MAY CHANGE THE PRICE RANGE, SO I WILL UPDATE ACCORDINGLY -