News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.86%, while traders in EUR/USD are at opposite extremes with 74.11%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/D1ZzX4wPYY
  • China reported 137 new Covid-19 cases in Xinjiang province and a mass testing has started in the area from Saturday evening - Channel News Asia
  • China A50 index plunged 1.8% amid sour sentiment across the Asia-Pacific. Beijing will kick off the Chinese Communist Party Plenum this week, setting economic goals for the next 5 years. https://www.dailyfx.com/economic-calendar#today https://t.co/lXQBUkehzE
  • PBoC sets Yuan reference rate at 6.6725 against the US Dollar - BBG
  • #Silver retracing its losses earlier in the session as price carves out a Bear Flag pattern With resistance at $25 holding firm, further losses appear in the offing A daily close below the 21-DMA (24.20) may open the door for a retest of 61.8% Fib support (21.74) $SLVR $SLV https://t.co/rCl3Ms3FB3
  • The Nasdaq 100 index looks set to pull back amid bearish momentum in the near term. The 50-Day Simple Moving Average (SMA) line may serve as an immediate support. Get your #equities update from @margaretyjy here: https://t.co/5Axsg6gAdd https://t.co/rToHnPLSeS
  • $GBPUSD the outlier early in the session, up marginally as UK-EU Brexit negotiators extend talks until October 28 https://t.co/ey92YW4RJw
  • #CrudeOil down 1.95% on the back of tightening #COVID19 restrictions in several European nations $EURUSD nudging marginally lower https://t.co/PUWTfKl08f https://t.co/XuyQOzV6sj
  • Market Snapshot Broad risk-off tilt to kick-off APAC trade #Gold and #CrudeOil prices plunging lower alongside the risk-sensitive $AUDUSD Haven-linked $JPY and $USD moving higher against their major counterparts
  • Wall Street Futures Update: Dow Jones (-0.504%) S&P 500 (-0.536%) Nasdaq 100 (-0.484%) [delayed] -BBG
EUR/USD Risks Near-Term Pullback on More Detailed FOMC Exit Strategy

EUR/USD Risks Near-Term Pullback on More Detailed FOMC Exit Strategy

2017-05-03 15:30:00
David Song, Strategist
Share:

- Federal Open Market Committee (FOMC) to Retain Current Policy.

- Fed Fund Futures Continue to Price 70% Probability for June Rate-Hike.

Trading the News: Federal Open Market Committee (FOMC) Interest Rate Decision

FOMC Interest Rate Decision

The Federal Open Market Committee’s (FOMC) interest rate decision may generate a limited market reaction as the central bank is widely expected to keep the benchmark interest rate on hold in May, but the fresh policy statement may boost the appeal of the greenback should the 2017-voting members reveal a more detailed exit strategy.

Why Is This Event Important:

With Fed Fund Futures still highlighting a 70% probability for a June rate-hike, the FOMC may increase its efforts to prepare U.S. households and businesses for higher borrowing-costs as the central bank appears to be well on its way to fulfil its dual mandate for full-employment & price stability. In turn, talks of an imminent rate-hike accompanied by a wider discussion to unload the balance sheet may generate a bullish reaction in the greenback, but more of the same from Chair Janet Yellen & Co. may dampen the appeal of the U.S. dollar as officials tame market expectations and look to buy more time.

Have a question about the currency markets? Join a Trading Q&A webinar and ask it live!

Impact that the FOMC rate decision has had on EUR/USD during the previous announcement

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

MAR

2017

03/15/2017 18:00 GMT

1.00%

1.00%

+81

+108

March 2017 FOMC Interest Rate Decision

EUR/USD 5-Minute

EUR/USD Chart

Even though Minneapolis Fed President Neel Kashkari dissented against the majority, the Federal Open Market Committee (FOMC) voted 9 to 1 to raise the benchmark interest rate to a fresh target range of 0.75% to 1.00%, with officials endorsing three to four rate-hikes for 2017. However, the U.S. dollar came under pressure as the fresh projections coming out of the central bank continue to show a terminal fed funds rate close to 3.00%, with EUR/USD snapping back from 1.0616 to end the day at 1.0702.

How To Trade This Event Risk(Video)

Bullish USD Trade: FOMC Fuels Bets For June Rate-Hike & Balance Sheet Adjustment

  • Need a red, five-minute candle following the rate decision to consider a short EUR/USD position.
  • If market reaction favors a bullish dollar trade, sell EUR/USD with two separate lots.
  • Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
  • Move stop to breakeven on remaining position once initial target is met, set reasonable limit.

Bearish USD Trade: Chair Yellen and Co. Stick to Current Script

  • Need a green, five-minute EUR/USD candle to favor a short dollar position.
  • Carry out the same setup as the bullish dollar trade, just in the opposite direction.

Potential Price Targets For The Release

EUR/USD Daily

EUR/USD Daily Chart

Chart - Created Using Trading View

  • Broader outlook for EUR/USD may become increasingly constructive as the exchange rate continues to trade above the 200-day SMA (1.0838) following breakout, with price & the Relative Strength Index (RSI) both extending the bullish formations carried over from late-2016.
  • Nevertheless, euro-dollar stands at risk for a near-term pullback amid the divergence in the momentum indicator; a bearish RSI trigger appears to be taking shape as the oscillator comes off of overbought territory and fails to preserve the upward trend from the previous month, with the first downside hurdle coming in around 1.0780 (100% expansion) to 1.0790 (38.2% expansion), which lines up with former trendline resistance.
  • Interim Resistance: 1.1140 (23.6% expansion) to 1.1160 (38.2% expansion)
  • Interim Support: 1.0470 (38.2% expansion) to 1.0500 (50% expansion)

Make Sure to Check Out the DailyFX Guides for Additional Trading Ideas!

For More Updates, Join DailyFX Currency Analyst David Song for LIVE Analysis!

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

To be added to David's e-mail distribution list, please follow this link.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES