Today’s main event is the Fed meeting with the rate announcement at 20:00 CET. As Fed is widely expected to stand pat, main market mover would be Fed’s new rate projections for 2020.
We have 2 main scenarios. The first one is if this evening more committee members forecasting a single rate hike in 2020 or two rate hikes in 2022. In that case, EUR/USD will likely drop below 1.1040, invalidating the bullish higher lows on a daily chart. But the bears will need a clear break under 1.0981 in order to resume the decline from 1.1179 for retesting 1.0879 low. At the moment the pair is testing 38.2% Fibo retracement on the fall from 1.1412 to 1.0879 at 1.1083.
Meanwhile, a dovish surprise would be a decline in the median long-run dot bellow September's level of 2.5% and/or participants citing higher inflation as a prerequisite for the next rate hike. This scenario would likely fuel a convincing break above 1.1116. On the upside, a sustainable move above 1.1116 will resume the rise from 1.0981 to 1.1179 resistance. That will also revive the case that correction from 1.1179 has completed and rise from 1.0879 is ready to resume.
Keep in mind that before today's FOMC meeting we'll receive the US CPI numbers, which could affect the pair. At the same time, any news regarding delay in US-China tariffs would also trigger some volatility.
We have 2 main scenarios. The first one is if this evening more committee members forecasting a single rate hike in 2020 or two rate hikes in 2022. In that case, EUR/USD will likely drop below 1.1040, invalidating the bullish higher lows on a daily chart. But the bears will need a clear break under 1.0981 in order to resume the decline from 1.1179 for retesting 1.0879 low. At the moment the pair is testing 38.2% Fibo retracement on the fall from 1.1412 to 1.0879 at 1.1083.
Meanwhile, a dovish surprise would be a decline in the median long-run dot bellow September's level of 2.5% and/or participants citing higher inflation as a prerequisite for the next rate hike. This scenario would likely fuel a convincing break above 1.1116. On the upside, a sustainable move above 1.1116 will resume the rise from 1.0981 to 1.1179 resistance. That will also revive the case that correction from 1.1179 has completed and rise from 1.0879 is ready to resume.
Keep in mind that before today's FOMC meeting we'll receive the US CPI numbers, which could affect the pair. At the same time, any news regarding delay in US-China tariffs would also trigger some volatility.
Comment:
The Fed offered up a surprising holiday season dovish delight for the market. And the dollar bulls was disappointed. EUR/USD is nearing to 1.1179 resistance, but today is ECB meeting, so watch it closely...
Order cancelled:
Last Thursday the pair hit 1.1200
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