The EUR/USD has gotten out of the previous squeeze by surging. On Tuesday morning, the currency exchange rate had reached the resistance of a monthly pivot point at 1.1217.
If this technical level gets broken, the rate would have a free range to surge up to the 1.1268 level. At that level the pair would meet with the weekly R1.
On Wednesday, May 1, the Federal Open Market Committee decided to left the key benchmark rate unchanged at the 2.50% level.
The US policymakers remain to use "wait-and-see" approach described earlier this year ahead of June's updated economic forecasts.
Surprisingly, the Fed cut the IOER (Interest Rate on Excess Reserves) rate by 0.05% to 2.35%. Analysts think that this reduction might signal the beginning of an easing cycle.
Nothing for USD until Thursday
This week all the action on the US Dollar from a fundamental side will be in the second half of the week. Meanwhile, there are large events to watch prior to that.On Wednesday, at 02:00 GMT the Reserve Bank of New Zealand will make their rate announcement. This event has caused moves larger than 100 pips during the last two announcements. If you trade sudden moves, get on this, stay late or wake up early.
On Thursday, the usual data starts. At 12:30 GMT the Canadian Trade Balance and the US Producers Price Index will be released. These events can cause a move from five to eighty pips. The range is explained in the weekly Economic Calendar Overview video.
On Friday, there will be two times to watch the calendar.
At 08:30 GMT the UK GDP and Manufacturing Production will be published. This event can cause a move of fifteen to twenty pips.
At 12:30 GMT the Canadian Employment data will cause a move of about forty pips. At the same time the US Consumer Price Index release should cause a move of up to twenty pips. Combined they can have various impacts on the Forex market.
Watch this week's economic calendar analysis and leave comments with questions about the specifics.
EUR/USD hourly chart's review
On the hourly chart the EUR/USD was standing at the resistance of the monthly pivot point at 1.1217. The future scenarios are built around this level.If the resistance breaks and the pair surges, the EUR/USD would reach the resistance of the weekly R1 at 1.1268. The push up could start as soon as the support of the hourly simple moving averages approach the pair from below.
On the other hand, the currency exchange rate might decline down to the 1.1200 level, where it has strong support provided by the weekly PP, a 38.20% Fibonacci retracement level and the 100-hour simple moving average.
Hourly Chart
On the daily candle chart, there is additional new information to take into account.
The 55-day simple moving average had approached the weekly R1 and began to strengthen it.
Daily chart
On Tuesday, on the Swiss Foreign Exchange 71% of the total open position volume was in short positions.
The sentiment has been above the 70% short level since Friday.
Meanwhile, trader set up pending orders in the 100-pip range were bullish. Namely, 54% of all orders were set to buy.
The orders had not changed since Monday.