This week will bring us 3 central bank meetings. Let’s consider how they may turn out for market moves
This week will bring us 3 central bank meetings. Let’s consider how they may turn out for market moves.
Since the beginning of the week, the EUR/USD pair has been gaining based on the weak US dollar. However, the situation may differ ahead of the Fed meeting. If the Fed lifts the interest rate and gives clues on the future monetary policy, the USD will be supported. On the daily chart, we see the bearish pennant. As soon as the pair breaks below 1.1280, the further decline is highly expected. The next supports will lie at 1.1233 and 1.1164. Moreover, the parabolic SAR signals the strengthening downward movement.
However, we should remember about the strength of the market sentiment. If the Fed sounds cautious, the investors will be disappointed. In this case, after the rise based on the rate hike, the USD will depreciate. The EUR/USD pair will be able to stick above 1.1338; the resistances are at 1.1408 and 1.1513.
The weakness of the USD pulled USD/JPY down. The further direction of the pair will depend on the Fed meeting. The hawkish US central bank will let the pair to recover. As a result, the pair will be able to return to the 112.49-113.98 channel. The resistances are at 113.10 and 113.98.
In the case of the negative outcome, the pair will keep falling. The first support is at 111.61.
The rise of the USD will definitely pull the GBP/USD pair to lows of April 2017 that the pair met last week. Supports lie at 1.2605 and 1.2452. A break of 1.2452 will be dramatic for the pair, however, technical indicators don’t signal a plunge. If the USD isn’t that strong after the Fed meeting and the Bank of England forecasts the economic growth for 2019, the GBP will get a chance to fight against the USD. To break the sideways channel, the pair needs to rise above 1.2735, a breakthrough will support a further appreciation of 1.2888.
To conclude we can say that the Fed meeting will become the main driver for the markets. However, the BOJ and BOE meetings won’t go unnoticed. Follow the statements of the central banks and the market sentiment to predict the market moves correctly.
Darya holds a BA. in Business Administration from High School of Economics and Law in Berlin and a B.A. in international relations from the Saint Petersburg State University of Economics. During her educational programs, Darya gained a skills set of economic and financial understanding that helps her to provide market commentary.Darya also provides weekly educational articles, webinars and video lessons.