FOREX NEWS: FOMC RELEASES A CLUSTER OF MARKET-MOVING DATA
EUR/USDForex News: The pair failed to break free of the current consolidation pattern which governs price action despite the fact that German ZEW posted worse than expected values and the American CPI showed an increase.
Technical OutlookSome US Dollar strength was seen yesterday at the time of the CPI release, making the pair bounce lower off the resistance located at 1.3585. The downtrend line seen in the picture above created a confluence zone but although all the ingredients for a break of support were present, the pair had a rather slow day. We expect the latest momentum to be continued today and the pair to break 1.3520 support, but a lot depends on the US events released in the second part of the day.
Fundamental OutlookAt 6:00 pm GMT the Federal Funds Rate (not expected to change from the current <0.25%) is announced within the FOMC Statement and will be followed half an hour by a Press Conference which will contain commentary regarding the monetary policy and possibly future rate direction. The FOMC will also release at 6:00 pm GMT their Economic Projections regarding inflation and economic conditions for the next two years. This cluster of events is likely to generate a lot of strong movement and we recommend caution if trading at the time.
GBP/USDUnited Kingdom�s Consumer Price Index showed yesterday that inflation dropped more than analysts had forecast and this weakened the Pound. However, the losses incurred were almost immediately recovered, creating a major whipsaw on the lower time frames.
Technical OutlookAlthough we saw yesterday some choppy price action, the resistance at 1.6996 is still holding and the Relative Strength Index is moving down, coming from overbought territory. These factors favor a move south, towards the potential support area located at 1.6920. A move above 1.7000 would invalidate the Double Top formation and would resume the uptrend, making 1.7040 the first target.
Fundamental OutlookThe Bank of England will announce today at 8:30 am GMT the breakdown of the MPC members� votes regarding the latest interest rate decision. This is a good opportunity for traders to assess the stance of the BoE on the interest rate and to see if the MPC members have a difference of opinion. Later in the day, the pair will be directly affected by the US events mentioned above.
