Needless to say, it is all about the Fed.
Well maybe not “all” as before than, there is the question of the CPI (see Preview: The CPI report might be more important than the Fed ). The data could be shaping the tone of the statement depending how it comes in. For a review of the FOMC statement, required reading is Adam’s FOMC preview: ‘Considerable time’ or bust. One other thing to be aware of is the Fed will release the Central Tendencies and the dot graph of the Fed members projections on where they see the Fed Funds rate at the end of 2015, 2016 and so on. The market will be most focused on 2015 but all the year changes will be headline making news. Below, is the projections for the economic variables.
The Feds Central Tendencies from September.
Regarding the rate projections, the average value for the Fed Funds at the end of 2015 was 1.375 in September. That was up from 1.1 or so in June. The cluster of dots will likely become more bunched in this months projections.
From a technical perspective, the EURUSD the up and down action has been well communicated in many a post by now, and the range for the pair since November is fairly well defined. Yesterday, the price of the EURUSD took a long look above the 1.2500/08 area as the dollar was pressured with the Russian ruble turmoil, and stocks dominating. Today, the USD is the strongest currency of the majors, and the EURUSD has moved back down toward the rising 100 hour MA (blue line in the chart below) at 1.2450. The pair found support against this moving average on Monday as well. It is consolidating in this area now as the CPI data is awaited and perhaps any other news from Russia or movements from the stock market.
Other levels include trendline support, which comes in at 1.2415 and the 200 hour moving average, which currently comes in at 1.2402 (see green line in the chart above). The 1.2357-59 was lows from November. A break would give traders ideas of a break out move lower, but be aware that it is still December and trending may be a difficult undertaking. Nevertheless it needs to be respected on any break below.
On the topside, if the 1.2500/08 level gives way, the 1.25307 and then the 50%of the move down from the October 15 high at 1.25638 will eyed as the next targets. The 1.2577 was highs from November. A move above it will have traders anticipating a higher push for the pair.
The risk level is at high levels today. It seems stocks are somewhat behaved in early trading. The USDRUB is back down a bit. Oil prices are hanging at the lows but steady. Nevertheless, it is December, liquidity conditions are light and there are a lot of influences. So trade accordingly (i.e., be careful).
