EUR/USD Daily Analysis: Markets have moved sideways for the better part of June and we now find ourselves in a tight 1.3580-1.3500 range before the FOMC meeting today at 18:00 UTC. While we use technical analysis for our entries/exits we feel it is important to understand the fundamental undercurrents, if for no other reason than we can understand the trends that we are seeing on the technical charts. Basically markets are waiting to see if anything particularly bullish comes out of the FOMC meeting, such as a larger than expected taper (10 billion expected) or any bullish comments about accelerating taper, higher-than-expected inflation, or most importantly, an accelerated timeline for an interest rate hike. An interest rate hike would have course lead to a higher USD especially when contrasted against the negative deposit rate in the Eurozone.
Technically longer-term analysis is bullish (look at rising support on weekly chart), and medium term analysis is bearish (we have had a 500 pip drop since May 8th), though the recent consolidation between 1.35-3580 has created a mixed hourly analysis and a key pivot: 1.3530. A break below 1.3530 on the charts would signal that bears are still in control and open up the run to our weekly target of 1.3470. Above 1.3530 and we remain short-term mixed with a bullish leaning toward 1.3600.
4h Chart
Long-term Trend Analysis Chart
Our Preferred Trades*: We will stay flat on this pair with the FOMC meeting pending. We will re-evaluate the technical situation after the FOMC meeting and send a PRO alert out if we decide to take a position. We are leaving our USDCHF short open for now (see USDCHF analysis for details).
Yesterday’s EUR/USD SwingPRO Signal Result: No setups triggered yesterday.
Today’s SwingPRO Signal: Flat for now.
*CandlePRO: CandlePRO can be used in conjunction with our daily analysis and “our preferred trades.” For example, if we prefer “going short” or “selling a rally” then we would look for bearish candlestick signals after a rally or near resistance levels. Alternative if we prefer “going long” or “buying a dip” then we would look for bullish candlestick signals on price drops or near support levels.
