The EUR / USD pair resumed its upward movement after a slight correction in the Asian session. Investors continue to win back the results of the FOMC meeting held yesterday. The regulator left unchanged the main parameters of monetary policy and long-term forecasts for rates. Earlier, some investors have bet that the regulator may revise the forecasts for rates for 2022 or 2023. The median forecast remained unchanged, but the opinion of some representatives of the Federal Reserve regarding long-term forecasts for rates is changing. At the current meeting, 4 FRS representatives expect an interest rate hike from zero in 2022. At the December meeting, only one FRS representative held a similar position. A rate hike from the zero level in 2023 is already expected by 7 representatives of the FRS, against 5 in December.
At the final press conference, the head of the Fed, Jerome Powell, tried to extinguish all speculation about a possible curtailment of the QE program in the future. He noted that this issue is not on the agenda and it is too early to discuss it. The regulator wants to see real economic growth, not growth forecasts, in order to start discussing the issue of a gradual tightening of monetary policy. As soon as there are real signs of sustainable economic recovery, the Fed will immediately inform the market about it.
It is noteworthy that, unlike the US dollar, the yield on US bonds continued to move upward. Today, the yield on 10-year government bonds has tested the 1.683% mark and retains the potential for further growth. Therefore, the position of the dollar in the foreign exchange market is not hopeless. Due to the growth of government bond yields, the US currency may regain lost ground in the second half of the week.
The economic calendar indicates that a very interesting trading day awaits us today. In Europe, investors will closely follow the speeches of the head of the ECB Christine Lagarde. In the US, the focus will be on weekly labor market data and indices from the Philadelphia Fed.
On the chart, the local priority is on the side of buyers. Today we are waiting for the breakdown of the level 1.1990. Further prospects for the price movement will depend on the price reaction to this level. It is not necessary to exclude the formation of a false breakout and the resumption of the downward movement.
The main scenario is a false breakdown of the 1.1990 level and a downward reversal.
Alternative scenario - consolidation above 1.1990 and growth in the direction of 1.2050.
The current fundamental background is positive. We consider shorts in case of a false breakout of the 1.1990 level.
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