TheNews

Trading the News: Federal Open Market Committee Interest Rate Decision

Another unanimous vote by the Federal Open Market Committee (FOMC) to retain the current policy may dampen the appeal of the greenback and spark a near-term advance in EUR/USD as market participants push out bets for the next rate-hike.

What’s Expected:

Why Is This Event Important:

With Fed Funds Futures reflecting limited expectations for higher borrowing-costs in 2016, Chair Janet Yellen and Co. may largely endorse a wait-and-see approach for monetary policy as the central bank argues market-based measures of inflation compensation remains weak while ‘most survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.’

How To Trade This Event Risk

Bearish USD Trade: FOMC Votes Unanimously to Keep Status Quo

• Need green, five-minute candle following the rate decision to consider a long EUR/USD position.
• If market reaction favors a bearish dollar trade, buy EUR/USD with two separate position.
• Set stop at the near-by swing low/reasonable distance from cost; at least 1:1 risk-to-reward.
• Move stop to entry on remaining position once initial target is met, set reasonable limit.

Bullish USD Trade: Increased Number of Fed Officials Dissent

• Need red, five-minute candle to favor a short EUR/USD trade.
• Implement same strategy as the bearish dollar trade, just in the opposite direction.

Potential Price Targets For The Release
EURUSD H1

• The diverging paths for monetary policy continues to cast a long-term bearish outlook for EUR/USD, but the pair may mount a larger recovery over the days ahead amid the string of failed attempts to close below 1.0960 (23.6% retracement) to 1.0970 (38.2% retracement).
• Key Resistance: 1.1760 (61.8% retracement) to 1.1810 (38.2% retracement)
• Key Support: Interim Support: 1.0380 (78.6% expansion) to 1.0410 (61.8% expansion)

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