Here comes day X – the Federal Reserve will announce its monetary policy with a likely 0.25% rate hike. Next the markets are expecting another 0.25% hike and a short-term ceiling of 5.00% and then a rate cut. Investors are expecting the European Central Bank to raise the rate by 0.50% at tomorrow’s meeting, another 0.50% at the next meeting and further 0.25% to the 3.75-4.00% level.
In such a situation, the rhetoric of the central bank may be the deciding factor, so after today’s “X” day, tomorrow’s “Y” day will be just as important. To the previously described plans of the Fed and the ECB, we should also consider that the ECB has given the markets a clearer action plan than the Fed, so the US central bank can affect the exchange rate from this side as well, if desired. The problem is that the Biden administration, unlike the Trump administration, has given no hint of the desired dollar exchange rate.
We still believe that the White House has not changed its attitude towards the national currency, otherwise, we would have heard some rumors by now. Therefore, our main scenario remains the same – the dollar will strengthen as a result of the important central bank meetings.
On the weekly chart, the price paused at the 138.2% Fibonacci level. As you can see, this is a very strong level. The Marlin oscillator turns down from the overbought zone.
On the daily chart, there were almost no changes over the past 24 hours, although there was an unsuccessful attempt to attack the upper limit of the target range of 1.0758/87.
On the four-hour chart, the price remains below the balance line indicator, the Marlin oscillator is progressing in the area of the downtrend. We expect the euro to fall on the Fed meeting.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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