© Dukascopy Bank
EUR/USD was trading on a positive note during the previous working week, as the common currency managed to show some notable gains against the American Dollar. The vast majority (53%) of Dukascopy Community members saw the pair higher by the end of the period ended Sep 11, and their expectation used to be fully correct. The EUR/USD opened the trading week on Monday just around the 1.11 mark, but rallied more than 200 pips to close in the vicinity of 1.13 five days later. The Greenback was changed by the Euro on investor's cautions ahead of the Federal Reserve's critical policy announcement this Thursday. Meanwhile, in case of interest rates hike the Greenback will become more attractive to yield-seeking investors. Fundamentals used to have insignificant impact on this currency pair. Even the University of Michigan consumer sentiment index tumbled to 85.7 in September from 91.9 in August. This was the lowest level in a year and well below expectations for 90.3.
As volatility in the equity markets remains uplifted, traders are moving away from the Greenback as Fed meeting approaches. As a result, the advantage of bullish votes increased even more over the past five trading days, up from 53% to almost 63%. Market participants also see the pair higher by Friday of this week, with the mean forecast being placed at 1.127. As Jignesh suggests "This weeks main risk event is the FED rate statement. The expectation is for a sell off in the USD as the FED is not likely to raise based on the current inflation outlook. Resistance comes in at previous highs at 1.16 - 1.17 which is a likely place for the pair to revert to." Concerning the economic data, on Wednesday, the US is to publish figures on consumer price inflation. While the next day, the Federal Reserve is going to announce its latest monetary policy decision.
© Dukascopy Bank