It should be a quiet end to the week for EURUSD as there in not much data out of the US or Eurozone, although the University of Michigan confidence surveys have been market-moving on the odd occasion.
Heading into Wednesday’s Federal Open Market Committee meeting, fed futures markets price zero chance of a rate hike this time around and a bit less than 20% of a move at the next meeting on July 26-27. But even though there will be no move on rates on Wednesday, the post-meeting statement and updated dot plot for the fed funds rate will be of great interest to FX traders.
If the median forecast of the committee members sticks with two rate hikes this year, questions will be asked about whether they will have to be front-loaded to avoid the Presidential election campaign. That could mean July and September, something the market is nowhere near pricing in.
Management and risk description
From an Elliott Wave perspective, the euro has probably completed an initial 5-Wave impulsive (bullish) wave sequence from 1.1100 to 1.1415 (see daily chart) and is now correcting this “initial” advance.
Mathematical retracement supports lie about the 1.1290, 1.1250 and 1.1220 levels, in preparation for the resumption of EURUSD's uptrend toward this year’s May peak of 1.1615 (refer daily chart).
Entry: any dip to 1.1235/1.1220 today would present a buying opportunity.
Stop: 1.1187, initially.
Time horizon: allow this month for target to be met.
EURUSD daily chart (click to expand)
EURUSD weekly chart (click to expand)
Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more
— Edited by Gayle Bryant