Moment of truth for USD
Hi, dear traders!
Today is the most important day of the trading week. At 14:00 ET, the Federal Reserve will announce its policy decision, as well as release the statement by the FOMC. It would be followed by the press-conference by chairman Jerome Powell at 14:30 ET. The markets are pricing in a 25 basis point increase – from 0.25% to 0.50%. If the actual hike matches these forecasts, it will push the US dollar up. However, it would not lead to a massive upsurge of USD. On the other hand, if the FOMC increases the rate by 50 basis points, the US dollar will skyrocket. The FOMC will also release its statement on the current state of the world's leading economy and its prospects in the near future. It is very likely to influence traders significantly as well.
Market players will also pay close attention to Jerome Powell's comments during today's press conference, his rhetoric, and the signals he would send to the markets. Hawkish comments by Powell would give serious support to USD, boosting it against other major currencies. There are several data releases on the economic calendar today, but they are not as important as the Federal Reserve's policy decision and Powell's statements.
Daily
According to the daily chart, bullish traders failed to steer the pair above the key psychological level of 1.1000 yesterday. With investors awaiting the Fed to tighten monetary policy, there is no sense in opening short positions for market players. The state of the US economy is quite strong, and the upcoming interest rate increase is a very strong bullish factor for the US dollar. The bullish candlestick retreated after rising to 1.1020 yesterday, leaving a long upper shadow and a very low bullish body. The pair closed below the red Tenkan-Sen line of the Ichimoku cloud once again, as well as the notable level of 1.0958.
This indicates traders are using the pair's upward movement to open short position at higher prices, and not when EUR/USD has bottomed out. Today is likely to be a very volatile trading day, and finding the right moment to enter the market would be quite difficult. It is the moment of truth for USD, which could be on the rise today. The interest rate hike is almost a certainty, but how big will it be? Jerome Powell's rhetoric would largely determine the US dollar's trajectory today. Opening short positions when the pair briefly goes up could be possible. However, traders who are starting out or are unwilling to take risks are recommended to stay out of the market.
Good luck!