General analysis EURUSD for 03.11.2021
Current dynamics
The price range in the Forex market is limited on Wednesday. Investors are cautious ahead of the Fed meeting. Market participants hope to get specific information about the volume of QE reduction and the timing and frequency of monetary policy tightening.
It is worth taking into account that the Fed often uses cautious rhetoric, but acts decisively and aggressively. More than half of the major economists believe that the volume of asset purchase reduction will amount to 15 billion per month. Thus a complete abandonment of the quantitative easing policy will take 8 months. At the same time, almost 20% of specialists predict a complete rejection of QE within 6 months. If the head of FRS Jerome Powell will announce concrete figures and then confirm that the Fed can accelerate the reduction of purchases, the EURUSD will go below 1.1500.
Another important topic will be the announcement of plans to tighten monetary policy. No member of the Open Market Committee has spoken about a rate hike in 2022 at the moment. At the same time, the market estimates the probability of two rounds of rate hikes next year at 70%. Powell is unlikely to give any specific date, which is too aggressive and uncharacteristic for a Fed governor. Market participants will interpret Powell's remarks based on his comments on QE and inflation.
Important data will be released in the U.S. today at 14:15, 15:45, 16:00, and 17:00 (GMT+2) that could create significant volatility in the market. At 20:00 (GMT+2), the Fed will announce its interest rate decision. The Fed press conference will start at 21:30 (GMT+2).
Support and resistance levels
On the 4-hour chart, the instrument is consolidating near the Bollinger Bands moving average, which acts as the key support level. The indicator is reversing downwards and the price range has shrunk considerably, indicating that a downtrend is forming after a brief correction. The MACD histogram is in the negative zone, holding a weak sell signal. Stochastic does not give a clear signal to enter the market.
- Support levels: 1.1495, 1.1520, 1.1545, 1.1565, 1.1580.
- Resistance levels: 1.1590, 1.1605, 1.1625, 1.1650, 1.1685.
Trading scenarios
- It is possible to open short positions at the current price with a target of 1.1525 and a stop loss at 1.1615. Implementation period: 1 day.
- Long positions should be opened above the level of 1.1615 with a target of 1.1670 and a stop-loss at the level of 1.1595. Implementation period: 1 day.