A few weeks ago, the market expected a heated discussion of monetary tightening during the Fed meeting. However, a rise in coronavirus cases is making some changes. The issue of reducing the bond-buying program and raising interest rates will remain on the agenda. It will probably be postponed, even in comparison with the plans discussed during the previous meeting.
Federal Reserve Chairman Jerome Powell is likely to be neutral or dovish in his speech, at least in terms of interest rates, primarily because he expects to continue talking about the risks of the worsening epidemiological situation. The euro/dollar pair still cannot reach the strong reversal level of 1.1855.
We can establish bullish market sentiment if the price breaks through this level. It will indicate the likelihood of the pair’s further upward movement to test the levels of 1.1919 and 1.2023.
In anticipation of the outcome of the Fed meeting, market participants are likely to push the pair from side to side, making money on relatively small price fluctuations. Therefore, I think that there is no point in holding positions for a long time. A prolonged directional movement is possible only after the regulator's meeting.
According to the hourly chart, the quotes have dipped below the level of 1.1819.
Besides, the pair has a chance of sliding to 1.1806
, from where I expect an upward wave to the local high
, and it's 1.1840