FOMC Preview: What to Expect of EUR/USD?

FOMC Preview: What to Expect of EUR/USD?

27 April 2016, 19:15
Roberto Jacobs
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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.


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