Pre-FOMC Price Action: S&P 500, USD, EUR/USD
Pre-FOMC Talking Points:
- Today is full of event risk, with the Federal Reserve at 2pm and a slew of corporate earnings scheduled for release after market close at 4pm.
- The US Dollar is putting in a bearish move ahead of the FOMC, and this has helped EUR/USD to push back up to Fibonacci resistance.
- The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.
Today is a big day full of event risk. At 2pm the FOMC hosts their April rate decision, followed by the press conference at 2:30. And then after the closing bell at 4pm we’ll hear from a plethora of US corporates for their recent quarterly earnings announcements. There’s some big names reporting later so likely we’ll see stocks stay on the move, and that was a focal point during this archived webinar.
The S&P 500 has built in a comfortable area of resistance around the 4200 handle. This appears to be very sensitive to just how optimistic Chair Powell might be. More optimism may spell faster-than-expected rate hikes, which could provide a bit of pressure to the S&P given the continued hold at this resistance.
Now, with that being said, on shorter-term time frames, there is still scope for bullish breakout potential. The big question is what Chair Powell might be able to say that could elicit that outcome.
S&P 500 Four-Hour Price Chart
US Dollar Not Waiting for the Break
In the time that I hosted the webinar and written the article, USD bears have made a mark. At the time of the webinar, USD was attempting to hold support around prior resistance, taken from around the 91.00 handle. But – there was also a bear flag formation that kept the door open for downside continuation.
It appears as though USD bears did not want to wait around, and prices are making another push towards the low a couple of hours ahead of the FOMC.
US Dollar Hourly Price Chart
EUR/USD Jumps Right Back to Resistance
EUR/USD has been in a clear bullish trend through this re-emergence of USD weakness through early-Q2 trade. But, similar to the US Dollar, it does not look as though traders wanted to wait around for the Fed.
EUR/USD is back up to the same Fibonacci resistance that held the highs on Monday. This is the 61.8% retracement of the 2021 pullback move. This sets up for breakout and/or reversal potential around FOMC. If traders are bullish the USD, this could be an operative area of resistance to look to for bullish-USD exposure into FOMC. Conversely, for USD bears, this same area with the high on Monday produces a breakout zone that can be followed in the search for fresh highs.
EUR/USD Four-Hour Price Chart
--- Written by James Stanley, Senior Strategist for DailyFX.com
Contact and follow James on Twitter: @JStanleyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.