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18.09.202408:02 Forex Analysis & Reviews: Hot Forecast for EUR/USD on September 18, 2024

If the leading U.S. media were assuring the inevitability of a 50 basis points interest rate cut on Monday, yesterday, it seemed everyone had forgotten about those reports. The same outlets casually began talking about a 25 bps cut instead. This, of course, had its effect and even allowed the dollar to start strengthening from the opening of the U.S. trading session. But in reality, it no longer matters much how big today's interest rate cut will be. The dollar has been losing ground since spring when talks about the upcoming monetary policy easing by the Federal Reserve began to intensify. The market has already priced in one or two cuts—those very 50 bps.

Of course, the fact that this is the first rate cut in several years will impress the markets, and the dollar will weaken for some time. But the scale of its decline will still be minor. What's far more important is what Fed Chair Jerome Powell will say. But, based on his previous speeches, he will most likely stick to ritualistic phrases, essentially saying that future interest rate decisions will consider macroeconomic dynamics. In other words, the head of the Fed is unlikely to say anything concrete. Therefore, the market will eventually return its focus to the interest rate disparity, which has recently shifted significantly in favor of the dollar. It's quite possible that once the initial emotions subside, the dollar will start to strengthen. This process could take several months.

Exchange Rates 18.09.2024 analysis

During its upward momentum, the EUR/USD pair nearly reached the local high of September 6, at which point the volume of long positions decreased. As a result, a pullback-stagnation occurred, fitting within the component of the upward cycle.

In the four-hour chart, the RSI technical indicator exited the overbought zone during the pullback but remained in the bullish area of 50/70.

Regarding the Alligator indicator in the same time frame, the moving average lines point upward, aligning with the price movement.

Expectations and Prospects

Price stabilization above the 1.1150 level is necessary for the next growth phase. Under this scenario, a complete recovery from the recent correction and an update to the medium-term trend's high is possible. It's important to note that today, technical analysis takes a backseat, as speculators' primary focus is on the outcome of the Fed meeting.

The complex indicator analysis suggests a pullback in the short term, while indicators are geared towards an upward cycle in the intraday and medium-term periods.

*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.

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