Keeping in mind this is a busy economic data week. The Euro still looks positioned to keep the momentum of Germany's stimulus packages.
Federal Reserve Meeting: The U.S. Federal Reserve is expected to announce its interest rate. Investors will monitor the Fed's quarterly economic forecasts and Chair Jerome Powell's comments for clues about the path of monetary policy going forward, even if no change is anticipated.
Both the BOE and the BOJ central banks are expected to announce their interest rate decisions. While the BoJ's decision is still up in the air, given recent economic statistics, the BoE is expected to stick to its present policy position.
Bullish Trade Idea.
Thesis: The euro will strengthen against the U.S. dollar, targeting 1.1000 due to improved European fiscal policies and a less hawkish Federal Reserve.
Entry: Buy at range 1.0875 - 1.0890 (current support zone)
Take Profit (TP): Range 1.0990 - 1.1000 (psychological and technical resistance)
Stop Loss (SL): 1.0830 (below key support).
Risk-Reward Ratio: 1:2.5
My rationale: Germany’s fiscal expansion and increased EU spending will boost economic optimism for the euro. he Fed is expected to hold rates steady, and if Powell signals no urgency to hike, it could weaken USD demand.
Bearish Trade Idea:
Thesis: The U.S. dollar will regain strength if the Federal Reserve adopts a less dovish tone, sending EUR/USD toward 1.0750.
Entry: Sell at range 1.0940 - 1.0960 (near key resistance)
Take Profit (TP): 1.0760 - 1.0750 (strong support)
Stop Loss (SL): 1.1000 (above resistance).
Risk-Reward Ratio: 1:2.2
My rationale: If Powell hints at further rate hikes, it could increase U.S. bond yields, supporting USD. Fed’s economic projections (dot plot) could indicate fewer rate cuts in 2025, increasing USD demand. Ongoing global trade tensions (U.S.-China tariffs) could lead to risk-off sentiment, benefiting the dollar or investors may rotate into USD as a defensive move.
Tradingview link: Here
Insights by: Shiven Moodley (CMSA®, FMVA®)
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