It usually really hard to predict future movements on the EURUSD ahead of the FOMC. But today’s statement and rates decision is not so eagerly anticipated as the previous ones. No one really thinks that there will be a rate cut or a change in the recent FOMC view.
Recent movements off the EURUSD respected the technical analysis. In the last week we had a small interruption from the ECB and Mario Draghi but as we could see, it did not cause a major shift in the markets. A week later we are more or less on the same levels as we were last Thursday.
Last week upswing allowed the price to form the right shoulder of the H&S formation (blue rectangles). At the end of the last week we had a nice bearish breakout of the neckline (red) but sellers did not have enough power to drag the price lower, which can be a signal of their weakness. What is more, we can see that price is now locked in the wedge formation (blue lines), which in this situation should be followed by a bullish breakout and continuation of the recent dollar depreciation. For now this scenario seems the most probable. Mostly due to the fact that sellers did not use many occasions to start a major downswing.
The best idea for a trade would be a buy at market price with stop loss placed under 1.1210. Take profit should be open as breaking the 1.1340 resistance may start a new bullish wave.
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