The EUR/USD has increased its trading volatility by retracing down on Tuesday. However, by the middle of Wednesday's trading it was once more located near the 1.1200 mark.
Meanwhile, it could be spotted that all of the many technical support levels only have minor impact on the currency exchange rate.
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 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 had made a big dip down to the 1.1170 level. During the move it revealed that the various technical support levels have only minor strength. Namely, they are not strong enough to keep the pair from falling.Due to that reason it is expected that the rate could pass the combined support of the 100 and 200-hour simple moving averages. In that case the currency pair would decline afterwards to the 1.1160 level, as there is no technical support down to that level.
On the other hand, the currency exchange could continue to bounce around the 1.1200 level in sudden sharp moves both due to US trade politics and the psychological effect of the 1.1200 level.
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.
By the middle of Wednesday, 73% of open position volume was in short positions.
Meanwhile, trader set up pending orders in the 100-pip range were bullish. Namely, 59% of all orders were set to buy.