The euro/dollar during the European session was trading in a 1.1255 – 1.1290 range. Following the publication of the FOMC minutes, the euro weakened to 1.1213 against the dollar.
During their last meeting on 26-27th April, the FOMC members debated the possibility of an interest rate rise in their next meeting (14-15th June). The Fed bosses are ready to do so only if the economic data, affecting GDP, will support such action. According to data from the CME group, the likelihood of an interest rate rise in June has increased to 34%. Let’s not forget: the interest rate saw its first rise for 9 years in December 2015 to a 0.25-0.5% range.
The weakening of the euro against the dollar stopped at 25th April’s minimum. On the daily an inverted pattern is forming, indicating a fall for the euro to 1.1000 by mid-June of this year.
On Wednesday the fall for the euro against the dollar was around 100 points. Taking into account that the euro is oversold in the euro/pound cross, on Thursday I expect to see a W-shaped pattern emerge at 1.1200. The pattern will form if the euro/pound cross begins to correct after yesterday’s drop.
Day’s News (EET):
Intraday forecast: minimum: 1.1200, maximum: 1.1232, close: 1.1230.
Euro/dollar rate on the hourly. Source: TradingView
The euro/dollar fell to 1.1214 after the publication of the FOMC minutes. The fall stopped at the 112th degree. Corrections often begin from the 112-135 degree zone. Taking into account the correction on the euro/pound, I expect to see a W-shaped pattern for the euro/dollar. It’s not 100% that the market will perfectly pan out as I forecast. The player mood is constantly changing under pressure from the news. If 1.12 is passed, the next nearest target is 1.1080 (see daily graph).
Euro/dollar rate on the daily. Source: TradingView
On 5th May the day’s pinbar from 3rd May was worked off. On 18th May the weekly pinbar was sent packing. A close of the growth from 1.1215 to 1.1616 forces me to look at a head and shoulders pattern for the time being. The 1.1215 minimum from 25th April should be a support. After an unsustained consolidation, we can head for 1.1080.
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Forecasts which are made in the review constitute the personal view of the author. Commentaries made do not constitute trade recommendations or guidance for working on financial markets. Alpari bears no responsibility whatsoever for any possible losses (or other forms of damage), whether direct or indirect, which may occur in case of using material published in the review.
Director of Alpari's analytical department
## ojimadu position
Senior Alpari analyst
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