EUR/USD Forecast Today 19/9: Pulls Back After FOMC (Video)
Date
9/19/2024 3:00:15 PM
(MENAFN- Daily Forex)
The Euro initially tried to rally a bit against the US dollar in early trading on Wednesday, but as we creep towards that FOMC interest rate decision statement and press conference, it looks like a little bit of the bullishness is starting to come out of this market. Ultimately, it's worth noting that there is significant support at the 1.10 level underneath, not only due to the fact that it is a large round psychologically significant figure, but it is also an area where we see the 50 day EMA. I would imagine that there are probably quite a few options barriers in that region. Above, if you zoom out on the chart, the 1.1250 level has been significant resistance in the past.
There is Resistance Above
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It's also probably worth noting that the 1.12 level will also be resistance. So, I think you more or less have a zone up there that could cause issues. Some traders will look at this and suggest that there is a bullish flag, and I really don't know if I can argue with that, but I think a lot of things are going on at the same time that may catch a lot of people off guard. For example, the question that I'll be asking isn't the interest rate cut, I think pretty much everybody expects at least 25 basis points, although there are quite a few traders in the Fed Fund Futures markets suggesting there could be 50 basis points. That being said, if we see a 50 basis point cut, that's pretty aggressive.
The next question is, what does the Federal Reserve see? Do they see economic conditions deteriorating so much that they're going to have to get in front of them.
If that's the case, the US dollar probably strengthens. Ironically, the bigger the cut, the more positive it probably ends up being for the US dollar once everything is digested. Keep in mind that Thursday features the Bank of England and Friday features the Bank of Japan. So, there's plenty out there to get the US dollar moving. As the dollar strengthens against other currencies, typically it will here as well, and of course, vice versa. So, the next couple days will end up being very noisy. And really at this point in time, we may not change much by the time the week closes out.
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