Today is a very important day. Traders will learn about the Fed’s plans for the key interest rate. In our video review, we will find out what expectations may affect the euro and the pound sterling.
Since the beginning of the trading day, the pound sterling has been stagnant. It goes on hovering near the lower limit of the range, where it has been trading for more than a week. Meanwhile, the euro inched up. The rise contradicted forecasts for the eurozone macroeconomic reports. Notably, the data turned out to be worse than expected.
As expected, the unemployment rate remained unchanged. However, the previous data was downwardly revised to 6.6% from 6.5%. Thus, we can say that employment increased. The situation with inflation is even worse.

The eurozone inflation dropped, thus encouraging the Europeans. However, financial markets have another view on the situation. The expected slowdown in the consumer price growth to 8.7% from 9.2% pointed to a possible cut of the benchmark rate by the ECB. That is why the slackening to 8.5% dispelled doubts about such a scenario.
However, instead of falling, the euro got stuck. The fact is that traders are waiting for the results of the FOMC meeting. Notably, traders priced in the 25-basis-point rise in the key rate long ago. Now, they are more focused on Jerome Powell’s comments. Recently, there have been a lot of discussions about the end of the monetary policy tightening and the key rate cut. The first cut could take place as early as this autumn.
Curiously, at the previous press conference, the Fed Chair said that the regulator was not planning to lower the key interest rate until 2024. If Jerome Powell confirms this statement, a decline in the US dollar will be replaced by a confident and long-lasting increase. If Jerome Powell avoids answering questions about a possible key rate cut, the greenback will continue losing value.

Ahead of the publication of the Fed’s meeting results, we see that the euro/dollar pair hit the support level of 1.0800. Thus, the flat movement turned into a full-scale correction. However, the situation has not changed considerably since the euro is still trading within the upward cycle.
A decline in the volume of short positions near the level of 1.0800 led to a rebound. As a result, the euro started climbing, thus recouping losses after the recent drop.
Now, a lot will depend on the news flow, including information about Jerome Powell’s speech. This event is likely to attract speculators’ interest, which = may cause price swings.
From the technical point of view, the price consolidation above 1.0930 may lead to a prolongation of the uptrend. Meanwhile, a breakout of 1.0800 may spur a downward correction.

Meanwhile, a decline in the pound/dollar pair became slower near the lower limit of the sideways channel of 1.2300/1.2440. This led to a drop in the volume of short positions, which was confirmed by stagnation.
Until the price breaks either limit of the range, it may show a rebound. From the technical point of view, this may lead to a rise toward the limit of 1.2440. Under the current conditions, a breakout strategy (1.2300/1.2440) is still the main one. Only a breakout of either limit will cause noticeable changes.


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00:00 INTRO
00:16 Euro, Pound
00:40 EUROZONE UNEMPLOYMENT RATE
01:00 EUROZONE ANNUAL INFLATION RATE
01:31 Fed’s key interest rate
02:02 Jerome Powell
02:31 EUR/USD
03:34 GBP/USD