Today’s biggest event risk – Fed interest rate decision
Posted by themarketanalyst on September 16, 2008
The currency market will be subject to today’s interest rate decision from the Fed at 2:15pm Eastern Time. Until then it would perhaps be better to stay at the sidelines except for some quick intraday trade. Looking at how yesterday’s trade oppportunity evolved for the Euro/Dollar, we could see that the currency pair continues to be highly conforming to the Fibonacci levels. It consolidated near the 50% line before spiking up to above 1.43. It eventually bounced up from the 38.2% line and once again at the 50% line and it will likely be a matter of time before it leaves these levels behind.
However, I believe that technical analysis should not completely disregard the fundamentals. The latter could be complemented by the former by supporting one bias or the other. As long as there is no other major movement (note that some key CPI data will be released), an interest rate cut by the Fed would be all we need (or a acommodative monetary stance) for the euro/dollar to start a considerable bullish move (at the wait for ECB statements).
Note: Yesterday’s trade opportunity would have produced a 52 pip gain.
