EUR/USD
Hello Traders,
We are facing a very volatile market lately with a lot going on.
The ECB has done it again, launched a new QE program and delivered a rate cut following a more than expected economic slowdown and muted inflation.
In the weekend, Saudi's Aramco was hit by a drone attack, cutting its production by 50%.
Those latest occurrences disrupted markets; opening gaps were obvious in safe haven currencies, gold, WTI and its correlated currencies like the CAD.
All focus now shifts to FOMC decision in 2 days which will give us more clue about direction of the markets in the near term.
Technically, the pair erased almost half the gains that were made post ECB, is back trading slightly below 1.10 and created an evening star candlestick pattern, still in the down channel seen on the chart.
I expect the downtrend to continue.
2 scenarios are to occur on Wednesday post FOMC: a less dovish Fed or a more dovish Fed.
In case of a less dovish Fed (no hints of future rate cuts or surprising markets by keeping rates steady), EUR/USD might break YTD lows and plummet to levels near 1.08 (bottom of the channel, Fibo level).
In case of a more dovish Fed (hinting at future rate cuts), EUR/USD might first test the upper band of the channel near 1.11 and a breakout above this level opens door for further gains.
I will update my forecasts post FOMC.
Good luck
We are facing a very volatile market lately with a lot going on.
The ECB has done it again, launched a new QE program and delivered a rate cut following a more than expected economic slowdown and muted inflation.
In the weekend, Saudi's Aramco was hit by a drone attack, cutting its production by 50%.
Those latest occurrences disrupted markets; opening gaps were obvious in safe haven currencies, gold, WTI and its correlated currencies like the CAD.
All focus now shifts to FOMC decision in 2 days which will give us more clue about direction of the markets in the near term.
Technically, the pair erased almost half the gains that were made post ECB, is back trading slightly below 1.10 and created an evening star candlestick pattern, still in the down channel seen on the chart.
I expect the downtrend to continue.
2 scenarios are to occur on Wednesday post FOMC: a less dovish Fed or a more dovish Fed.
In case of a less dovish Fed (no hints of future rate cuts or surprising markets by keeping rates steady), EUR/USD might break YTD lows and plummet to levels near 1.08 (bottom of the channel, Fibo level).
In case of a more dovish Fed (hinting at future rate cuts), EUR/USD might first test the upper band of the channel near 1.11 and a breakout above this level opens door for further gains.
I will update my forecasts post FOMC.
Good luck
Ramzi Abou Abdallah, CFTe, CMT
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