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#1 26-01-2021 17:42:19

johnedward
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From: Paris - France
Registered: 21-12-2009
Posts: 3068
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EUR/USD: FOMC meeting today, GDP report released Thursday

EUR/USD: FOMC meeting today, GDP report released Thursday


Forex traders' eyes are now focused on today's Fed meeting. A monetary status quo is also expected this week, but the outcome of the Monetary Policy Committee (FOMC) meeting will be scrutinised to assess the Fed's views on the immunisation campaign and the new stimulus package desired by Biden. Verdict today, before the release on Thursday of the first-ever US GDP estimates for the fourth quarter, expected to be +4.2% quarter-on-quarter.

Frank Dixmier (Allianz) believes that "the Fed could begin to communicate a slowdown in its asset purchases at the end of the year, if the economic rebound materialises in the second half of the year and if the vaccination campaign allows a recovery in consumption. The sequencing of the Fed's exit policy has already been specified: the Fed will first slow down its buybacks, then stop them. Only then will it be able to consider a rise in interest rates, which is not anticipated until 2023."

On the statistical front this week, traders learned of the IFO business climate index for Germany, which this month contracted to 89.9, missing the median expectations by 1.4 points.

As of right now the pair is trading at $1.2155.

KEY CHART ELEMENTS

The now validated break in the 20-day moving average (in dark blue) changes the technical framework that prevailed until then. After more than two months of uninterrupted firm increases, the time is ripe for a downturn under the above-mentioned short-term trend curve, which has now sharply steepened its downward slope. Last weekend, we specified two technically identifiable support points that will be available if the $1.2115 and $1.2000 continue to fall. The first of these has been erased on a bout of volatility, which leads us to anticipate a break in the second (still in progress), and therefore to readjust the target, aiming for a broader bearish objective. We retain a negative opinion as long as the spot quotes below its 20-day moving average (in dark blue). Trend curve that offers the advantage, in this case, of identifying a clear trailing stop. The currency pair just completed a hardly engaging wedge at the contact of this trend line.

MEDIUM TERM FORECAST

With regard to the key chart factors we have mentioned, our opinion is negative in the medium term on the Euro Dollar (EURUSD) exchange rate.

Our entry point is $1.2140. Our target price for our bearish scenario is $1.1876. To preserve the capital employed, we advise you to position a protective stop at $1.2211.

The expected profitability of this Forex strategy is 264 pips and the risk of loss is 71 pips.

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