Date: 29 Apr 2019

The U.S Federal Open Market Committee decides on interest rate this week, with almost all economists agreeing that the U.S central bank will keep borrowing costs unchanged for the third time this year. The American economy has fared much better than expected during the first-fiscal-quarter of 2019, which has helped to pair-back expectations of an impending interest rate cut from the FOMC.

With fears about a potential recession in the American economy pushed aside, market participants will be examining the FOMC monetary policy statement for any signs of hawkish rhetoric, particularly any policy language concerning the recent improvement in economic data coming from the United States economy.

Last Friday, the United States economy posted its strongest first-fiscal-quarter growth figures since 2015, with United States GDP for the first three months of this year expanding by a much better than anticipated 3.2 percent. The report showed that the American economy was boosted by improving personal spending and stronger than expected exports, and a decline in imports coming into the country.

The improving sentiment towards the U.S economy has also shown up in recent U.S corporate reports and a surge in the value of the U.S Dollar Index. The only problem for the U.S economy has been the persistent lack of inflationary pressure, which the Federal Reserve is likely to highlight during Wednesday’s policy statement.

Later today, we see the release of the Federal Reserve’s preferred measure of U.S inflation, the core personal consumption expenditures price index. The release will be closely watched by traders and investors, following the much better than expected 0.4 percent increase in monthly CPI inflation last month.

Overall, the key theme that financial markets are watching for on Wednesday will be any hawkish shifts in the FOMC policy statement, hinting that the balance of risks has now tilted to the upside, following the bearish March FOMC policy meeting.

 

EUR/USD Daily Mountain Chart | Source: ActivTrader

EUR/USD Daily Mountain Chart | Source: ActivTrader

 

Last week the EUR/USD pair slumped to its weakest trading level since June 2017 as traders moved back into the greenback as fears about the U.S economy subsided. The EUR/USD pair is technical weak while trading below the 1.1130, with major weekly support located at the 1.1116 and 1.1050 level. Key near-term resistance is located at the 1.1175 and 1.1216 level, with the 1.1250 level extended resistance.

 

Written by Nathan Batchelor, External Analyst

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