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James Hyerczyk

The Euro is trading higher and inside yesterday’s wide range as investors position themselves ahead of the release of the U.S. Federal Reserve’s interest rate decision and monetary policy statement. The Fed is not expected to raise rates at this meeting, but investors want to know the number and the timing of its next cuts. Currently, investors are pricing in as many as three rate cuts this year.

At 14:14 GMT, the EUR/USD is trading 1.1212, up 0.0018 or +0.16%.

Volatility is expected when the Fed releases its decision. This is because the Fed could offer several possibilities as to the timing of the expected rate cuts. For example, policymakers could decide to leave rates unchanged in June, but indicate it will raise rates in July, September and December. This is the most dovish scenario and the EUR/USD could rally on the news.

Or, the Fed could decide to leave rates unchanged in June and July and indicate its first cut in 10-years will take place in September. This is essentially a hawkish move by the Fed and the EUR/USD could weaken on the news.


Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1181 will reaffirm the downtrend. The next two targets are 1.1116 and 1.1107.

The main trend changes to up on a move through 1.1348. This is not likely, but there is the possibility of a potentially bullish closing price reversal bottom.

The main range is 1.1107 to 1.1348. The EUR/USD is currently trading inside its retracement zone at 1.1227 to 1.1199. Trader reaction to this zone could set the tone of the Forex pair today.

The major support remains the long-term Fibonacci level at 1.1185.

On the upside, the main target zone is 1.1278 to 1.1318. This zone is currently resistance.


Daily Technical Forecast

Based on the current price action, the direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to the uptrending Gann angle at 1.1202.

Bullish Scenario

A sustained move over 1.1202 will indicate the presence of buyers. If this move generates enough upside momentum then look for the rally to extend into the 50% level at 1.1227. This is followed by a downtrending Gann angle at 1.1248.

The angle at 1.1248 is the trigger point for an acceleration to the upside with the next target a 50% level at 1.1278.

Bearish Scenario

A sustained move under 1.1202 will signal the presence of sellers. Potential support is lined up at 1.1199, 1.1185 and 1.1181.

If 1.1181 fails then look for the selling to extend into the uptrending Gann angle at 1.1155. This is the last potential support angle before the 1.1116 and 1.1107 main bottoms.


It’s a wide range, but look for an upside bias to develop on a sustained move over the 50% level at 1.1227. Watch for a downside bias to develop on a sustained move under 1.1185.

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