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EURUSD Forecast : FED Monetary Policy Statement Ahead
EURUSD Forecast: FED Monetary Policy Statement Ahead
Market players will be focusing on FED’s rate decision and monetary policy statement due on Wednesday.
The FED will announce its June monetary policy decision on Wednesday. Markets don’t expect any changes but the chance of a move lower for the Federal Funds Target Rate in July is now deemed to be very high. The ‘Fedwatch’ tool from the Chicago Mercantile Exchange puts it at more than 80%.
Monetary Policy Statement will be on focus rather than the interest rate decision. How dovish the FED will be? I believe that may now be hard for the FED to appear more ‘dovish’ in its policy prognosis than the market.
Although Inflation data set with CPI 1.8% ( YoY), Core CPI 2.0% (YoY) and Core CPI 0.1% (MoM) was below the expectations, it is not too far away from The FED’s targets. ( 2.0% YoY)
The USD gained weight against all of the major currencies after Friday’s Retail Sales release showed consumer spending rising 0.5% in the month of May. This was worse than expected but excluding gas and auto sales, retail sales beat expectations. Yet the main reason why the dollar gained weight was because of revisions. Rather than falling -0.2% retail sales increased by 0.3% in April. This means that consumer appetite in the US is stronger than what was previously reported.
Euro is still under bearish pressure due to weak macroeconomic data, political turmoil – Italy Issue and Brexit –
If the economic data that could convince Fed officials that the economy is healthy enough and might not require an immediate rate cut, we may see a strong Dollar rally. Or if we see the Fed signal a one and done approach to easing, we, however, could see limited dollar weakness.
Shortly, we have three scenarios regarding FED’s Monetary Policy Statement
1st: “Less Dovish” FED than expected. 50%
2nd: A one and done approach. 40%
3rd: Ultra Dovish with a rate cut cycle.10%
Major Trend: Bearish ( 1.22 Trend Reversal )
Longer Term Trend: Bearish ( 1.18000 Trend Reversal )
Intermediate-Term Trend: Bearish ( 1.16500 Trend Reversal )
Near Term Trend: Bearish ( 1.14200 Trend Reversal )
- Fake wedge breakout.
- Testing the cloud base at 1.12000.
- Price is below EMA 50, SMA 100 and 200.
- Near term Bearish Pressure below 1.12600.
- Daily Chart Resistance 1: 1.13600 SMA 200 Resistance 2: 1.14200
- Daily Chart Support 1: 1.11600 Support 2: 1.11000
- The first scenario may send the price below 1.10800.
- The second scenario may send the price 1.13600 and 1.14200.
1.12000 is the key near term support. Bearish Crab is completed. 1.12600 is the key resistance on the H4 Chart. Bearish pressure remains below 1.12600.
Breakout of 1.12000 would carry the pair towards 1.11600 support. Potential Bullish Cypher pattern is being printed.
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