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The Fed Meeting Is in the Focus of Attention


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In the current trading week, the currency majors have demonstrated high trading activity and volatility. At the moment, investors have taken a wait-and-see attitude. Today, the Fed will announce its decision on a key interest rate at 21:00 (GMT+2:00).

Recent economic reports from the United States point to the stable growth of the economy, a strong labor market, as well as optimistic indicators of economic activity in the manufacturing and services sectors. Demand for the US currency is still high. Since the last Fed meeting, the dollar index (#DX) has grown by more than 2.5%. Currently, the indicator is testing annual highs.

According to experts, the US Central Bank will keep the key interest rate at the same level of 2.00%-2.25%. It should be noted that most Fed politicians support a further increase in interest rates.

cme-fed-watch-tool-2018-11-08

Source: cmegroup.com

At the moment, 75% of financial market participants expect the next round of rate hikes to occur in December of this year. We recommend paying attention to the comments by the Central Bank representatives, which may have a significant impact on the expectations of traders.

Let's consider the current technical pattern on the EUR/USD currency pair

Support levels: 1.14000, 1.13400, 1.13000

Resistance levels: 1.14600, 1.15350, 1.16000

eurusd-2018-11-08

At the moment, the EUR/USD currency pair is consolidating. The key support and resistance levels are 1.14000 and 1.14600, respectively. Indicators do not send accurate signals:

- The price has fixed between 50 MA and 200 MA;

- MACD histogram is located in the positive zone, but has started to decline.

We recommend opening positions from the key levels.

If the Fed indicates a further increase in interest rates, the demand for the US currency may rise significantly. In case of breakdown and retest of the round level of 1.14000, it is necessary to consider sales of EUR/USD. The movement is tending to the key demand zone of 1.13400-1.13000.

Alternative option. If the price fixes above the "mirror" resistance of 1.14600, it is necessary to look for entry points to the market to open long positions. In the medium term, the EUR/USD quotes may reach 1.15350-1.16000.

When following positions, we recommend using a trailing stop.



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About the author


Igor Afa is a financial analyst at JustForex.

 

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