U.S. inflation data (CPI) came out as expected
Yesterday the pair dropped without apparent reason and slowly retraced higher during the Asian session.
U.S. inflation data (CPI) came out as expected and the German ZEW survey was just slightly better than forecast so the US Dollar strength was not triggered by surprising economic data but rather by expectations the Fed will finally announce a rate hike today.
One of the most anticipated events of the year is finally here: the Federal Funds Rate decision.
Currently the interest rate is
Half an hour later, at 7:30 pm GMT, Fed Chair Yellen will hold a press conference about the rate. Usually a rate hike triggers US Dollar strength (thus a move down for the pair) but sometimes when major events take place, the market doesn’t have a textbook reaction so I would recommend extreme caution at the time of the release.
We expect choppy and irregular movement throughout the day but from a strictly technical standpoint we must note that price is sitting below the two Exponential Moving Averages and the latest impulse is bearish (down). The slow move up is currently just a retracement to the fall seen yesterday. Resistance sits at 1.1040, support is located at 1.0925 and we favour the short side (down).
How to trade: Puts when 1.0925 is broken
The support at 1.0925 will act as the trigger for today’s trade. Once this support is broken, we favour end of day Puts. A break of the resistance at 1.1040 would invalidate the bearish scenario and would open the door for Calls.