EUR/USD: Fed’s decision on the rate

EUR/USD: Fed’s decision on the rate

3 May 2017, 09:43
Yuri Papshev

The focus of traders today will be the publication (21:00 GMT + 3) of the Fed's decision on the interest rate. It is likely that the Fed will keep rates today in the range of 0.75% - 1.00%. In the opinion of most market participants, the Fed can not raise rates no sooner than at its next meeting, which will be held in June. The Fed is also likely to announce a reduction in the balance sheet in September and raise interest rates in December. Most likely, the Fed today will give more cautious estimates to the US economy against the background of the latest contradictory data. A cautious position of the Fed will put pressure on the US dollar, which in many respects lost its achievements after the November presidential elections in the United States.

Of the news for today, it is also worth paying attention to the publication (09:00 GMT) of the Eurozone GDP for the first quarter (preliminary release). The GDP is expected to grow by 0.5% (by 1.7% in annual terms). The ECB considers the growth of the Eurozone economy still weak enough to begin curtailing the QE program in the Eurozone.

Nevertheless, the pair EUR / USD continues to trade in a narrow range near the level of 1.0910 after it sharply increased against the background of Macron's victory in the first round of the elections in France.

Most likely, the pair EUR / USD will remain traded in the range between the levels of 1.0850, 1.0950 until the end of the week. The second round of the presidential elections in France will be held on Sunday, May 7.

However, today's volatility may rise sharply in the foreign exchange market during the publication of US data, when important macroeconomic indicators for the US will be published between 15:15 and 17:00 (ADP employment, ) For April, and at 21:00 (the Fed's decision on the interest rate).

The positive dynamics of the EUR / USD pair is maintained above the support level of 1.0800. In case of updating the highs near the level of 1.0950, the pair EUR / USD growth may continue.

With a return below the level of 1.0800 will return and the downward dynamics for the pair EUR / USD.

 Support levels: 1.0900, 1.0800, 1.0740, 1.0710, 1.0685, 1.0580, 1.0530, 1.0500, 1.0485

Resistance levels: 1.0925, 1.0950, 1.1000

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