As we await the all-important federal reserve meeting

Today’s top market catalysts are trade wars, stock market index numbers creeping higher, ECB President voicing the position of stimulating the economy further and the much-anticipated Federal Reserve interest rate decision meeting.

As we await the all-important federal reserve meeting, Mario Draghi added more weight to the European currency. He voiced a new change in guidance by the ECB to stimulate the economy mainly by lowering interest rates. This will inevitably continue to drag the Euro lower.

During the federal reserve meeting in May, we saw previous hawkish sentiment leave the building and the words we heard were “wait and see”. Today we may witness a sharper turn towards the dovish side and see if Fed Chair Jerome Powell will “act as appropriate” to mitigate the end of a 10-year economic expansion.

Fed funds futures are a publicly traded futures contract that allows investors to speculate on when the probability of a rate hike or cut will likely be. Currently, there is more than an 80% chance that interest rates will be cut during the July Fed meeting.

We recommend watching the Japanese Yen and European Euro as over the last few months, these currencies have proven to be the most susceptible to news events and changes in economic data.

EURUSD

After a small breakout in June we have not seen enough follow through on the Euro Dollar currency pair. This indicates that we could be looking at false breakout. Momentum quickly disappeared and there was little volume when the Euro was at the top of its peak in June at 1.13239. If this week we stay below 1.1200 we can quickly see the Euro continue its way down to 1.1100. We are currently below the 50 EMA and our MACD histogram recently turned red on the daily timeframe. A sell position could the be most profitable trade on the EURUSD currency this week.