EUR/USD Weakness Persists- Bearish Series Takes Shape Ahead of FOMC

Federal Open Market Committee (FOMC) to Raise Benchmark Interest Rate by 25bp in March.

Will Majority of Fed Officials Highlight a Shallow Path for Fed Funds?

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

The Federal Open Market Committee (FOMC) assembly might worsen a seductiveness of a greenback as a executive bank is widely approaching to broach a 25bp rate-hike in March, yet a updated projections might beget a knee-jerk greeting should Chair Janet Yellen and Co. increasing their efforts to tame interest-rate expectations.

What’s Expected:

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Why Is This Event Important:

Fed Dot-Plot

Source:FRB

Comments endorsing a Jun rate-hike should beget a bullish greeting in a U.S. dollar as some Fed officials see operation for 3 or 4 rate-hikes in 2017. However, a infancy might continue to prominence a shoal trail for a fed supports rate as Chair Yellen argues ‘inflation altered adult over a past year, generally since of a abating effects of a progressing declines in appetite prices and import prices.’ In turn, a FOMC might continue to advise ‘market-based measures of acceleration remuneration sojourn low; many survey-based measures of longer-term acceleration expectations are small changed, on balance,’ and a dollar might onslaught to reason a belligerent should a cabinet adopt a some-more neutral tinge and try to buy time.

Expectations: Bullish Argument/Scenario

Signs of stronger salary enlargement accompanied by a pickup in domicile spending might keep a FOMC on march to serve normalize financial process over a entrance months, and a dollar might theatre a near-term convene should a uninformed collection of executive bank forecasts boost interest-rate expectations.

Risk: Bearish Argument/Scenario

However, a new decrease in domicile view interconnected with a ongoing debility in core cost enlargement might pull executive bank officials to adopt a discreet opinion for a U.S. economy, and a greenback might onslaught to reason a belligerent should a executive bank mostly validate a wait-and-see proceed for financial policy.

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How To Trade This Event Risk(Video)

Bullish USD Trade: FOMC Raises Benchmark Interest Rate Endorses Jun Rate-Hike

  • Need red, five-minute candle following a rate preference to cruise a brief EUR/USD trade.
  • If marketplace greeting favors a bullish dollar trade, sell EUR/USD with dual apart position.
  • Set stop during a near-by pitch high/reasonable stretch from cost; during slightest 1:1 risk-to-reward.
  • Move stop to entrance on remaining position once initial aim is met, set reasonable limit.

Bearish USD Trade: Fed Officials Endorse Wait-and-See Approach

  • Need green, five-minute candle to preference a prolonged EUR/USD position.
  • Implement same plan as a bullish dollar trade, only in a conflicting direction.

Potential Price Targets For The Release

EURUSD Daily

EUR/USD Daily Chart

Chart – Created Using Trading View

  • EUR/USD might continue to give behind a allege from progressing this month following a array of unsuccessful try to tighten above a Fibonacci overlie around 1.0660 (50% expansion) to 1.0680 (78.6% expansion), with a broader opinion still slanted to a downside amid a devious paths for financial policy; will keep a tighten eye on a downside targets generally as a euro-dollar sell rate starts to carve a array of reduce highs, with a break/close subsequent 1.0500 (23.6% expansion) opening adult a subsequent segment of seductiveness around 1.0470 (38.2% expansion) to 1.0500 (50% expansion).
  • Interim Resistance: 1.0880 (61.8% expansion) to 1.0910 (38.2% expansion)
  • Interim Support: 1.0340 (2017-low) and 1.0370 (38.2% expansion)

Impact the FOMC Interest Rate Decision has had on EUR/USD during a final meeting

February 2017 FOMC Interest Rate Decision

EUR/USD 5-Minute

EUR/USD Chart

Chart – Created Using Trading View

The Federal Open Market Committee (FOMC) kept a benchmark seductiveness rate with a stream aim operation of 0.50% to 0.75%, with a executive bank distinguished a rather offset tinge as officials note a ‘near-term risks to a mercantile opinion seem roughly balanced.’ Even yet Chair Yellen and Co. seem to be on march to serve normalize financial process in 2017, a executive bank appears to be in no rush to mislay a rarely accommodative process position as ‘market-based measures of acceleration remuneration sojourn low; many survey-based measures of longer-term acceleration expectations are small changed, on balance.’ The U.S. dollar struggled to reason a belligerent as a FOMC reverted behind to a wait-and-see approach, with EUR/USD gnawing behind from 1.0729 to finish a day during 1.0768.

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— Written by David Song, Currency Analyst

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

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