The Fed’s Rate. EUR/USD
Traditionally, for more than five years, the Fed, along with the decision on the rate, publishes a schedule of changes in interest rates for the future period - more precisely, it makes its prediction. This feedback method was once very positively received by the global investment community, and now it attracts special attention, since this forecast allows for the interpreting of the Fed’s current outlook for the following period, and given that the markets thrive on expectations, it is difficult to overestimate the importance of such information.
The rate for the Federal Funds is of principal importance, as, in the end, it is a key rate for absolutely all participants of the financial market. It is at this rate that banks are credited with balances that are accounted for in the Federal Reserve.
After the publication of the new value of the rate, a cover statement will follow, which will give an analysis of the current economic situation and the outlook of the Fed for the following economic periods.
The beneficiary of these events will be the EUR/USD currency pair. The situation for this currency pair is extremely interesting. On the one hand, the European currency has grown substantially to the US dollar and is technically ready for a correction, and on the other hand, any impulsive local corrections are bought, with great pleasure and greed, by large funds.
If the Fed does not receive clear signals for "tightening", the European currency can easily cross the line of 1.2, gain a foothold, and continue the upward trend moving toward the coveted benchmark of 1.25.
Of course, on its way the EUR will meet resistance in the area of the 1.215 mark, near the upper line of the lateral ascending channel, and the price behaviour of the currency pair near this figure will tell about its subsequent movement.
And the most interesting: if the market takes comments on the future policy of the Fed as hawkish, and the European currency starts to decline, then this movement will become a great opportunity to enter a long position on the pair, because, as is known, the market will reach the goals that it has outlined, and currently, many large funds are looking upwards, wanting to see a level of 1.25 for this pair.
A good level for buying in case of a sure exit of EUR from the local trading channel, drawn on the chart, will be the price close to 1.17. We wish you profitable trading!
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