EUR/USD – 4H.
As seen on the 4-hour chart, the EUR/USD pair performed a reversal in favor of the EU currency and anchored above the correction level of 100.0% (1.1106). Thus, the growth process can be continued towards the next target level of 1.1164. In recent days, traders have lost a certain direction of trade, the euro/dollar pair jumps up and down around the Fibo level of 100.0%, which has turned from an important level into a "passing yard". Even today, the pair's quotes may close below/above this level more than once, and most price changes are likely to occur in the afternoon when the information background gains strength.
Most of the world's experts agree that the probability of a rate cut at the October meeting of the Fed is 60-70%. This is less than many analytical agencies give as a forecast. Also, analysts around the world agree that it is not so important whether the US Central Bank will lower the refinancing rate or not. It is much more important what course the Fed will take for the next six months or a year. After two consecutive rate cuts, now the question of further changes in US monetary policy is particularly acute. If the Fed intends to further stimulate the economy by easing pressure on it, it will be a bad call for the US dollar. But this should be stated by Jerome Powell or at least hint at such a course of the Fed. If the Fed chairman announces the end of the period of rate cuts, it will calm the markets, return confidence to buyers of the US currency. The question is what is more important for Jerome Powell and what decision he will make based on a set of different factors. Let's start with economic statistics. In short, it has steadily deteriorated in recent months. And, for example, the stock market in the United States is growing, which is poorly combined with the threats of recession and weak economic data. Further, the Fed cannot lower the rate every month, otherwise, it will be at ECB levels very soon, it takes time to analyze the impact of reduced rates on the economy. However, Donald Trump is not asleep, he believes that the rate should be reduced to 0.0%, which will allow winning monetary competition from the European Union and China, will make the dollar cheaper, American goods – more competitive on world markets, and the service of the huge US government debt – more comfortable.
Thus, most likely, the rate will be lowered today and take a break. During this pause (at least a few months), the growth rate of the US economy, the world economy, the progress of negotiations on a trade deal between Beijing and Washington will be assessed and economic statistics for the US will be studied. However, surely this can be said only after the performance of Jerome Powell.
What to expect from the euro/dollar currency pair today?
On October 30, traders will finally come out of the hibernation in which they have been in the last days and even weeks. I expect an increase in the activity of traders, but I expect this effect in the afternoon, and perhaps even late in the evening. Reports on US GDP, ADP may not cause much attention from traders, as it will be in the shadow of the evening summing up of the two-day meeting of the Fed.
The Fibo grid is based on the extremes of May 23, 2019, and June 25, 2019.
Forecast for EUR/USD and trading recommendations:
I recommend selling the pair with a target of 1.1024 if a new close is made below the level of 1.1106 (100.0% Fibonacci). A stop-loss order above the level of 1.1106.
I recommend buying the pair with the target of 1.1164 and the stop-loss order below the level of 1.1106 since the closure was performed above the Fibo level of 100.0%. But during the evening events, I recommend being extremely cautious about any open transactions.
