FX.co ★ Technical analysis and forecast for EUR/USD on March 18, 2021

Hello, dear traders!

The Fed's decision on interest rates, the publication of the FOMC statement, and Powell's press conference were the main events of the previous day as well as the entire week. The regulator kept the interest rate at 0.00%-0.25% as expected. At the same time, the Fed revised its economic forecast, which turned out to be more optimistic than many experts had forecast. According to the statement, the US economy is recovering at a faster pace. In this light, the Federal Reserve reversed its GDP growth forecast to 6.5% from 4.2%. In 2022, the economy is estimated to expand by 3.3%. The Fed foresees the unemployment rate to drop to 4.5% this year and tumble to 3.9% in 2022. Inflation expectations were revised upward to 2.4% from 1.8% this year. The central bank expects the indicator to reach 2.0% and 2.1% in 2022 and 2023 respectively. Meanwhile, the interest rate should remain at the same level in 2021. Four Committee members believe that interest rates will be increased in 2022. Seven members anticipate that this will happen only in 2023.

As for Powells press conference, he mainly talked about economic prospects amid the coronavirus pandemic. Powell confirmed that the US economy is recovering faster than estimated owing to the adoption of a large-scale stimulus plan and a good vaccination pace. However, the key issues remain and they are employment, small businesses, and low household spending. Overall, yesterday's FOMC meeting did not have a significant impact on the US dollar. Now, let's turn to the daily chart.

Daily

The EUR/USD pair strengthened considerably during yesterday's trading. A strong level of 1.1900 prevented the price from falling further despite its attempts to do so. According to the chart, EUR/USD received solid support from a strong technical zone of 1.1880-1.1885. In fact, the pair has started its upward movement form this range. The price closed at 1.1978 and formed a big white candlestick. At the time of writing, the quote rose to 1.1990 and reversed. Currently, the pair is trading close to 1.1945. As for trading recommendations, I'd like to point out that there is something positive and negative in every decision, comment, and event, which can make the price to move in either of the two directions. In my opinion, yesterday's decision by the Fed did not trigger a sharp drop in the US dollar. However, the market decided otherwise.

H4

As for the H4 chart, EUR/USD is trading in the 1.1990-1.1882 range. Bulls still cannot break the upward border of this range at 1.1990. If the candlestick manages to preserve its current shape, you can consider selling the pair with the target set close to 1.1900. In such a case, you should place a Stop Loss above 1.1990. Given the important psychological level of 1.2000 and the orange 200 EMA, you can open short positions from the 1.2000-1.2025 price range and only if there is a false breakout at 1.1990.

Have a nice trading day!