FX.co ★ Analysis and forecast for EUR/USD, April 29, 2021

As widely expected, the Federal Reserve did not say anything new.

Greetings, dear traders!

As expected, at the end of the two-day meeting, the US Federal Reserve did not change interest rates and kept them in the range of 0.00% -0.25%. Notably, this decision was made unanimously. All eleven members of the Open Market Committee (FOMC) voted for it. The regulator confirmed once again that it would use all available tools to support the US economy if necessary. The central bank strives to achieve the main goals, namely the maximum level of employment, as well as stable inflation. Naturally, the Fed mentioned the negative consequences of the coronavirus pandemic in the United States and abroad.

Fed officials added that the pace of economic recovery will largely depend on the epidemiological situation in the country. The regulator stress that there have been improvements in economic recovery and employment. As for inflation, its current growth is determined by temporary factors. The Fed also said it would continue to buy back $120 billion of assets per month, including $80 billion worth of Treasury debt and $40 billion in mortgage-backed securities. Fed Chairman Jerome Powell outlined once again that the economy is a long way from employment and inflation goals. It will probably take some time to achieve further substantial progress. The regulator intends to maintain ultra-low interest rates until its employment and inflation goals have been met.

Fed Chairman Jerome Powell repeated the same statements during his press conference. In particular, he noted that the time had not yet come to curtail the bond-buying program. Market participants were not surprised by Powell's comments regarding the economic recovery and the impact of the pandemic on it. Given the quick rate of vaccination in the United States, economic activity may return to normal in the near future. As for inflation, Jerome Powell believes that it will grow for some time and then stop. If we sum up the results of the April meeting of the Federal Reserve and Powell's speech, we did not hear anything new. The US Central Bank will continue to stick to its current soft monetary policy until full economic recovery. With this approach, the current interest rates will be kept unchanged for a long period of time. This is clear enough, without further ado.

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Naturally, the dovish tone of the FOMC statement and the neutral-dovish rhetoric of Fed Chairman Jerome Powell could not support the US currency. Yesterday's initial decline in the euro/dollar pair, which occurred long before the Fed meeting, was again stopped by a strong support zone of 1.2060-1.2050. The pair reversed upwards from 1.2055 following the FOMC meeting results and rose above the resistance of 1.2115. After reaching 1.2134, the pair pulled back slightly and closed trading on April 28 at 1.2124. At the time of writing the article, EUR/USD was heading to a strong technical level of 1.2150. So far, it has not been able to consolidate near this level. Currently, it is dropping to the resistance level of 1.2115.

The main question is whether the buyers of the euro will be able to keep the single currency above 1.2115 and push it to yesterday's high of 1.2134. If so, the pair may approach the key resistance area of 1.2190-1.2242. A breakdown of the last level will finally indicate an uptrend for the euro/dollar and send the pair to 1.2300, 1.2380, 1.2420, 1.2460, and, possibly, to the most important psychological and technical level of 1.2500. However, these levels are still too far away. As for the trade recommendations, the miracle did not happen. The Fed's soft policy leaves almost no chance for the US currency to strengthen across the board. There will be pullbacks. That is exactly what I suggest using when opening long positions. It is the main trading recommendation. It is favorable to open long positions after short-term declines in the areas of 1.2120-1.2110 and 1.2100-1.2080. If a bearish reversal pattern of candlestick analysis appears at the end of today's trading with the closing price below the level of 1.2100, the breakdown of the resistance area of 1.2100-1.2115 is likely to be false. So, the trajectory of the pair will have to be revised.

Good luck!