FOMC preview: What to expect of EUR/USD?

By FXStreet FXStreet (Córdoba) – The Federal Open Market Committee (FOMC) is due to announce its monetary policy decision which will be accompanied by a statement at 19:00 GMT.

Following December’s “lift-off” the Federal Reserve is expected to maintain the policy unchanged and focus poses on the statement, with investors looking for clues about the path of future hikes.

The tone of the statement will likely trigger a response in the US dollar. The Fed is broadly expected to play down the prospect of more rate hikes this year, given deteriorating domestic data and turbulence abroad. A dovish stance will likely weigh on the greenback, although some analysts argue that markets may be already positioned for such an outcome and therefore the dollar might in fact benefit.

Meanwhile, if the Fed sends a strong signal that despite global turmoil, it could possibly raise rates one of two meetings in the future, the US dollar will get a significant boost.

EUR/USD levels to watch

As for EUR/USD, a dovish Fed could send EUR/USD to the upside, with next resistances seen at 1.0985 (100-day SMA) and 1.1000 (psychological level) ahead of key level at 1.1050 (200-day SMA).

On the downside, a not-so-dovish Fed will undoubtedly lift the …read more

Source:: FX Street