The U.S. dollar is set to make moves in a few hours and with several technical arguments in the works, EUR/USD looks like a market with the most opportunities to potentially catch short-term pips.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on USD/JPY ahead of today’s FOMC statement, so be sure to check that out to see if there is still a potential play!
|Equity Markets||Bond Yields||Commodities & Crypto|
|DAX: 12548.19 -0.55%
S&P 500: 3200.54 -0.21%
DJIA: 27086.78 -0.68%
|US 10-yr 0.796% -0.033
Bund 10-YR -0.315% -0.006
UK 10-YR: 0.299% -0.037
JPN 10-YR: 0.02% +0.002
|Oil: 38.18 -1.95%
Gold: 1730.80 +0.51%
Bitcoin: 9756.29 -0.2%
Ethereum: 243.37 -0.40%
Fresh Market Headlines & Economic Data:
U.S. consumer prices dipped 0.1%, falling for a third straight month
In April 2020, French manufacturing output slumped sharply again (−21.9%)
Oil falls towards $40 as U.S. inventory rise revives glut worries
China’s new bank loans fell in May, but broader credit growth quickened amid policy easing
Fed Debates How to Set Policy for the Post-Pandemic Economy
Upcoming Potential Catalysts on the Economic Calendar for U.S. & Asia:
FOMC Monetary Policy statement at 6:00 pm GMT
Fed Press conference at 6:30 pm GMT
U.K. House price balance at 11:01 pm GMT
Japan BSI Manufacturing Index at 11:50 pm GMT
Australia MI Inflation expectations at 1:00 am GMT (June 11)
SNB Financial Stability report at 4:30 am GMT (June 11)
What to Watch: EUR/USD
If you haven’t caught up with this week’s potential forex catalysts, the biggest one of the week is coming very soon: the latest FOMC monetary policy statement and outlook.
Forex Gump did his usual outlook on the event, and if you need a quick refresher on what we may see in a few hours from the Fed, check out his post: Q&A: What Can You Expect from This Week’s FOMC Meeting?
Given this is a top, top tier event, it’s best to probably go with a super liquid market if you’re looking to take action right around the statement release.
This helps avoid slippage when executing orders or possibly even large price gaps. And unless you’ve got a ton of experience trading Fed statements, it’s probably best to stay away altogether.
But for those who are looking to play the potential volatility ahead (either on a demo account or with very tiny risk), EUR/USD easily meets the above liquidity requirements. There are also quite a few technical setups for both bulls and the bears to watch out for around the event release.
For the EUR/USD bulls in the house, watch out for the Fed to maintain their massive stimulus measures and a cautiously optimistic economic outlook.
This would likely keep traders bullish on EUR/USD for now, and a really big spark for bullish momentum would any hints of negative interest rates (an extremely low probability scenario at this time).
In this scenario, watch out for bullish patterns if the 1.1250 – 1.1300 area is tested ahead of the event, or a break above the resistance just under 1.1400 before considering a short-term/swing bullish position.
For EUR/USD bears in the house, any hints of pulling back stimulus measures (a very low probability scenario) and/or an overly optimistic outlook on the economic recovery could spark selling in EUR/USD short-term.
Bearish reversal patterns around 1.1400 or a break below the ascending trend line marked on the one hour chart above would potentially draw in more sellers than buyers in this scenario.
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