The EUR/USD pair has been slightly negative during the trading session on Tuesday, but quite frankly with the Federal Reserve releasing an interest rate announcement, and more importantly a statement later today, it’s likely that this pair will be quiet between now and then. The European Central Bank looks likely to cut back on quantitative easing in 2018, so now the question will be whether the Federal Reserve is going to sound hawkish or dovish? This will come in the form of the statement, because quite frankly I think that an interest rate hike is all but a given, and when the market swings in one direction that violently, the Federal Reserve typically will do as suggested.
The question now is where do we go from here? I think that a break above the 1.18 level is a sign that the market is ready to go higher, it becomes more of a “buy-and-hold” scenario. Alternately, if we break down below the 1.17 level, it is more than likely due to the Federal Reserve sounding more hawkish than anticipated, and a re-pricing of the greenback will be necessary. Look at the weekly chart, it does in fact look likely that we are going to see a move to the upside, but it’s not until the statement comes out that I think we can make the move. If we do breakout to the upside as I anticipated, the market will go looking towards the 1.20 level, the 1.21 level after that, and then longer-term the 1.32 handle over the course of the next year or so. Either way, I think today will be important.
Written by FX Empire