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Hello, dear colleagues!
The FOMC Minutes published yesterday came in line with market expectations. Most Committee officials are in favor of a 50 basis point rate increase in June and July. In August, the Fed will start reducing its massive bond holdings at a pace of $95 billion a month. Meanwhile, inflationary risks are likely to stay high despite a modest fall in figures in April, which should be seen as an exception. Overall, the report has once again confirmed the regulator's plan to hike rates by 50 basis points and start shrinking the balance sheet by $95 billion in August. The American economy is still strong, as well as the jobs market, while inflation is at a record level.
Daily
Although yesterday's FOMC Minutes have already been priced in the dollar's value, investors still decided to buy the currency. The price pulled back to resistance at 1.0641 and then retraced up. Yesterday's candlestick acquired a long-enough lower shadow. Notably, the pair failed to reach the blue SMA and closed below the important technical level of 1.0700. Today, the pair trades under light pressure around 1.0677. During the Asian session, the quote touched 1.0700 but pulled back. Bulls will try to return above the mark, meaning the price could possibly go up.
H4
On the H4 chart, the orange EMA 200 provides strong support for the pair. The current candlestick is forming a relatively long lower shadow. If the body of the candlestick does not change, long positions could be considered with the target at 1.0745. As for candlesticks' shadows, when they emerge, strong barriers are usually below or above them. Yet, the strength of such barriers depends on the length of the shadows. The longer the shadow, the stronger the support or resistance, and the higher the possibility of a reversal. The greenback strengthened yesterday, and the market again priced the Fed's plan to raise rates by 50 basis points at the next two meetings. In this is the case, the pair may show growth today. Aggressive and risky buying could be considered from the current levels. Those not willing to take risks may go long on a brief bounce to 1.0665. If bearish candlestick patterns emerge in the resistance zone of 1.0745-1.0765 on charts H1 or H4, it will be a signal to sell the instrument.
Have a nice trading day!
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