Start Trading Now Get Started
Affiliate Disclosure
Affiliate Disclosure DailyForex.com adheres to strict guidelines to preserve editorial integrity to help you make decisions with confidence. Some of the reviews and content we feature on this site are supported by affiliate partnerships from which this website may receive money. This may impact how, where and which companies / services we review and write about. Our team of experts work to continually re-evaluate the reviews and information we provide on all the top Forex / CFD brokerages featured here. Our research focuses heavily on the broker’s custody of client deposits and the breadth of its client offering. Safety is evaluated by quality and length of the broker's track record, plus the scope of regulatory standing. Major factors in determining the quality of a broker’s offer include the cost of trading, the range of instruments available to trade, and general ease of use regarding execution and market information.

EUR/USD Forex Signal: US Dollar Strikes Back Ahead of FOMC Decision

By Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.

The EUR/USD price will react mildly to a number of important economic data from Germany. 

Bearish view

  • Sell the EUR/USD pair and set a take-profit at 0.9700.
  • Add a stop-loss at 1.000.
  • Timeline: 1 day.

Bullish view

  • Set a buy-stop at 0.9900 and a take-profit at 1.0000.
  • Add a stop-loss at 0.9800.

The EUR/USD price retreated to the lowest level since October 25 ahead of the upcoming interest rate decision by the Federal Reserve. It dropped to a low of 0.9855, which was about 2.3% below the highest level in October.

Fed decision ahead

The Federal Reserve will conclude its two-day meeting later on Wednesday. Economists have a mixed opinion about what to expect. Some, such as those from Bank of America and Goldman Sachs, believe that the bank will signal that it will continue hiking rates in a bid to fight the stubbornly high inflation.

The consensus is that the Fed will hike interest rates by 0.75% in this meeting, bringing the year-to-date increase to 375 basis points. The bank will also continue with its quantitative tightening policy in a bid to reduce the money supply.

The meeting comes at a time when the economy is flashing mixed signals. House prices have slumped after mortgage rates rose to the highest level in decades. At the same time, bonds have rallied, leading to an inverted yield curve. In most cases, such a curve is a positive sign of an upcoming recession.

On the other hand, the US has recently published mixed economic data. Last week, numbers showed that the economy expanded by 2.6% in the third quarter after falling to a recession in Q2. And on Tuesday, data by the ISM showed that the manufacturing PMI was 50.2, which is a sign of expansion.

The labor market is also tightening, with the number of job openings rising from 10.28 million in August to over 10.7 million in September.

The EUR/USD price will react mildly to a number of important economic data from Germany. The statistics agency will publish the latest employment data and trade numbers.

EUR/USD forecast

The EUR/USD price continued the sell-off that started last week as traders waited for the upcoming Fed decision. It has managed to move below the 25-day and 50-day moving averages and the key support at 0.9873. The Relative Strength Index (RSI) has moved slightly below the neutral point of 50. It also moved below the standard pivot point.

Therefore, the pair will likely continue falling as sellers target the next key support level a 0.9700. The stop-loss for this trade will be at the parity level.

EUR/USDReady to trade our free Forex signals? We’ve shortlisted the best Forex trading brokers in the industry for you.

Crispus Nyaga
About Crispus Nyaga
Crispus Nyaga is a financial analyst, coach, and trader with more than 8 years in the industry. He has worked for leading companies like ATFX, easyMarkets, and OctaFx. Further, he has published widely in platforms like SeekingAlpha, Investing Cube, Capital.com, and Invezz. In his free time, he likes watching golf and spending time with his wife and child.
 

Most Visited Forex Broker Reviews