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The amplitude of the last 5 days (high-low): 61p - 36p - 86p - 43p - 62p.
Average amplitude for the last 5 days: 58p (53p).
A few hours ahead of the announcement of whether the key rate of the Fed will change, the European currency rises in price against the US dollar. Right now, Mario Draghi, head of the ECB, is also giving another speech. A day earlier at the ECB forum in Sintra, he had already said that the regulator is ready to lower the key rate, thus bringing it to a negative value, and stimulate the economy with any available tools. Inflation is of a particular concern for Draghi, which was only 1.2% y/y in May. Today, Draghi can also tell traders anything related to monetary policy, but the strengthening of the euro started earlier, so we can conclude that traders expect a negative today, first of all, from the Federal Reserve. Indeed, after a whole year of Donald Trump's pressure on Jerome Powell, the Fed Chairman finally admits a reduction in the key rate. This idea was immediately picked up by the markets, as they treat this as an accomplished action, and only the timing of the decline remains unknown. However, we believe that it is too early to wait for the Fed to weaken monetary policy. Firstly, Powell can not go as fast in the wake of Trump. Secondly, although macroeconomic statistics has been extremely weak in recent weeks, this is not a reason to talk about recession. In any case, in a few hours we will find out what Jerome Powell's rhetoric is, which is likely to remain dovish. The only question is how dovish will he be? The rate at the end of today's meeting is unlikely to change. Thus, all attention is on the Powell press conference.
Trading recommendations:
EUR/USD started a new round of upward correction. Thus, we recommend that you sell the euro to the level of 1.1161, but when opening new sell-positions we recommend to wait until the end of the Fed's press conference.
It will be possible to buy the euro/dollar pair if traders manage to gain a foothold above the critical line, with the first targets of 1.1273 and 1.1302. In this case, the initiative on the EUR/USD will be back in the hands of the bulls.
In addition to the technical picture should also take into account the fundamental data and the time of their release.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen - the red line.
Kijun-sen - the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dotted line.
Chikou Span - green line.
Bollinger Bands indicator:
3 yellow lines.
MACD Indicator:
Red line and histogram with white bars in the indicator window.
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