June 14 2021
I am a participant in the Forex market it’s a Monday in June, and just like the last 2 Monday’s I am waiting for something.
So far this month I have been waiting for US NFP, CPI and now the hat trick of the FOMC.
The forex market is broadly short of US Dollars, and it seems to be trimming this position ahead of the two day Federal Reserve meeting.
I think the Fed may say they are thinking of starting to talk about tapering their bond purchases. Whether they elaborate in more detail is the key to the dollars immediate post-meeting direction.
The market sentiment looks undecided whether to continue to buy into the Federal Reserve dovish dogma of transitory inflation and current policy being appropriate. While many are concerned the Fed is going to fall behind the curve and has underestimated inflationary pressures, and will have to raise interest rates quicker and higher than expected, catching out the market who are unprepared.
EURUSD has been sold off from 1.2200 area and has now tested support at 1.2100. The downside target of this move is likely to be the key pivot support area of 1.2060.
The outcome from the FOMC is likely to prove the catalyst for the near term direction. However, while we stay above 1.2060 the EURUSD looks to be a buy.
A sustained break and close below 1.2060 would encourage the bears to attack 1.1990 and 1.1930 in extension.
Resistance today will be found at 1.2150/60 and then again at 1.2200
EURGBP could be particularly interesting today as the UK is likely to postpone the June 21 planned lifting of its pandemic restrictions for 30 days. You would think this would be a GBP negative.
However, sentiment for the GBP is one of enduring bullishness, and once the confirmation comes from the UK Government that opening will be delayed, the GBP could be ready for a rally, and break support at 0.8570 and test 0.8520.
Resistance will be found at 0.8610 and 0.8650 I will remain bearish provided the EURGBP stays below 0.8720.