FOMC to Drive the USD This Week

EUR/USD Analysis 11 Sep 2017

EUR/USD Spot Price: 1.1944

Support: 1.1850, 1.1822, 1.1800

Resistance: 1.1975, 1.1985, 1.2000

Trade Ideas - Trying to capitalize on USD weakness and EUR strength

  • Position: Long
  • Entry Point: 1.1850
  • Take Profit: 1.2050
  • Stop Loss: 1.1775

The EUR/USD is still in a bullish uptrend, however, we’ve fallen back off the highs. I’m still bullish on the Euro, however, we will need to make a conservative entry ahead of a key interest rate decision like the FOMC.

Enter on a pullback below 1.1850 as that’s a key support level. If we get USD weakness there is a chance for a longer-term move to 1.2050. We’ll set our stop loss at 1.1775 and if it breaks this area I would assume the short-term momentum is nearly over.


EUR/USD 240 min Chart - EUR/USD is looking to hit 1.2050

North Korea and Hurricanes

Last week was a big one from a news perspective. The week was lead off with more issues over North Korea and concerns with Hurricane Irma. As both faded as the week went along we were hit with some central bank meetings that had the potential to shape the Euro.

Both the Bank of England and the Swiss National Bank chose to keep official rates on hold and there was a dovish tone for the CHF and a more hawkish one for the GBP. Both these currency are correlated with the EUR so it has been important to watch the developments and see if ECB and President Mario Draghi will follow suit.

On Friday, just when we thought things had settled down, North Korea came out again with another missile test, sparking a rally in the safe havens. This time around though we didn’t get the sustained strength and the hedgers weren't even that interested in taking up a position ahead of the weekend. As there weren't any more developments over the weekend, markets are setting up for Wednesday and the FOMC.

Key for the Week - FOMC

There’s no doubt that the FOMC is the key event of the week. The expectation isn’t for a change in official interest rates, however, the press conference might hold the key to the fate of the USD. Any hawkish tone from Federal Reserve Chairman Janet Yellen will have the ability to spike the USD and that will send the EUR tumbling.

On Monday we also have Eurozone CPI. This might be our chance to enter on a spike lower if it disappoints as I suspect we won’t get huge follow through ahead of a big central bank announcement.

Technical Analysis - The Key Levels

The EUR/USD is still on a bullish long-term uptrend. However, I’m more interested in the range between 1.1850 and 1.205. Ahead of a big announcement, markets can often stay range bound. Unless CPI really impresses or disappoints, I’m expecting us to be in that range until the FOMC announcement.


EUR/USD - Key Levels

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