FOMC Preview: What to Expect of EUR/USD?
The Federal Open Market Committee (FOMC) will announce its monetary policy
decision when it concludes its two-day meeting at 18:00 GMT and it is
broadly expected to keep rates unchanged at 0.25-0.50%.
However,
main focus will be on the statement as investors search for hints of a
June hike as most analysts, and Fed officials, are expecting two more
hikes this year.
The tone of the statement should
determine US dollar short-term fate. While the Fed will remain data
dependent, a hawkish surprise which might signal a rate hike in one or
two meetings should be bullish for the dollar. Reading into the statement, a hawkish remark could be the FOMC describing risks as “balanced”.
On
the dovish side, comments on growth, inflation and headwinds from
abroad could discourage June/July hike expectations, weighing on the
greenback.
EUR/USD levels to watch
Trading
around 1.1320 ahead of the decision, immediate resistances line up at
1.1339 (Apr 26 high), 1.1394 (Apr 21 high) and 1.1464 (Apr 14 high). A
break above this latter, will pave the way towards the 1.1660 area
(100-week SMA) in the longer term. On the other hand, immediate supports
could be found at 1.1214 (Apr 25 low), 1.1193 (50-day SMA) and 1.1144
(Mar 24 low) ahead of 1.1079 (100-day SMA). A break here will refocus
the downside for the pair.