Trading volatility: EUR/USD on eurozone consumer confidence, FOMC minutes
There are two events on Wednesday 24 November to watch out for that my stir some volatility.
We’re looking at a long position around EUR/USD for the eurozone consumer confidence and the minutes of the last Federal Reserve meeting at which they left rates on hold.
The assumption is that the risk is to the downside for the dollar which could result in a climb to resistance for the European single currency.
(Video summary)
FOMC minutes
Next week, there is an important event coming up that could affect how trading works. In the past, people saw this event as risky, but now they are talking about how it could affect trading. This event is the release of the FOMC minutes, which will describe what happened at the last Federal Reserve meeting where they decided to keep interest rates the same.
Some people think that there won't be any rate cuts until the Fed starts cutting rates. Some recent clues have shown that the Fed might actually lower interest rates by next May, but this idea is being challenged. Because of this, there has been a small change in the US dollar's strength.
The FOMC minutes will give a chance to see what's really going on, and traders might find interesting opportunities to trade the euro dollar.
Eurozone consumer confidence data
On top of the FOMC minutes, there will also be flash eurozone consumer confidence data released next Wednesday. If the Fed keeps its cautious stance, the euro/dollar might go even higher.
Traders who already have the euro/dollar can think about setting a stop loss order around the 107.30 level and have a price target of 109.45. This suggestion is based on a rising support level, which means that the market is likely to keep going up. There have been higher lows and higher highs, suggesting that the market will correct itself instead of making a big change in direction.
If there is more evidence that the eurozone is more likely to raise interest rates compared to the US, it is expected that the euro will keep getting stronger against the US dollar. Right now, the euro/dollar is at 108.37, and traders are advised to set their stop-loss at 107.30 to protect against potential losses.
In the long run, it is possible that the euro will go even higher against the US dollar, with a price target of 109.45.
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