Today, on June 9th, the common European currency is consolidating close to 1,3615 close to the end of the European trading session in advance of the Fed’s meeting minutes scheduled for the American trading session. In particular, the Fed is going to publish the results of its 2-day meeting that took place on June 17-18th, Market Leader reports.
Today, on July 9th, close to the end of the American trading session, the FOMC is going to reveal its decisions made during the mentioned meeting in mid June. Market Leader recommends paying attention to the following factors:
At the very beginning of the minutes, the FOMC may hint that the Fed is close to launching the first interest rate hike since 2006. Then they may say that the Fed is getting closer to interest rate hikes faster than expected.
The revised FOMC forecasts on unemployment, inflation and interest rates released in June lead us to believe that the Fed is now more optimistic about the US economy.
Market participants may also seek more specific terms of the Fed completing QE3. For example, the Fed may hint at the NeD of tapering in October 2014 instead of December 2014. It should be noted that the Fed has been tapering bond purchases by $10bn every month since December 2013. If the pace is steady, the Fed is going to face the dilemma -
either to end QE3 by purchasing bonds for the last $15bn in October or to prolong it till December, when it is time to spend the last $5bn on bond purchases.
Possible Reaction of EURUSD
According to Masterforex-V Academy, there are 2 alternative scenarios for the US Dollar:
If the FOMC is optimistic about the near-term prospects of the US economy, this may back the US Dollar, thereby giving the American currency even more strength. Otherwise, the US Dollar is likely to weaken, especially against the common European currency.
The H1 chart of EURUSD indicates that the rally started by the Euro may resume after the price starts retracing down to the 1,3587-1,3575 support area. A break below it will give way to 1,3540 and 1,3500. Alternatively, if there is rally, we can expect the price to hit 1,3629, 1,3662, 1,3679.
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