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Pre-FOMC Outlook for EURUSD, GBPUSD and USDCAD

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With another FOMC event upon us today at 2pm EST, we turn our attention to some key levels to keep an eye on as the shake-up begins.

Before we get into the details, I have to stress the importance of not trying to trade through this event. While it may be tempting to try and profit from the increased volatility, attempting to do so will more often than not eat away at your account. The risk far outweighs the potential reward.

With that out of the way, let’s get into the analysis.

First up is EURUSD. After a 900 pip rally from the April low, the pair has now pulled back to a level last seen on May 5th. The 1.1050 level previously acted as resistance during the months of March and April on three separate occasions and should therefore act as support moving forward.

I will remain slightly bullish here in the short-term as long as this level holds. However a daily close below it would turn me bearish and could trigger a move back to the 1.0850 level.

Summary: Watch for bullish price action on a retest of 1.1050 as new support. Key resistance comes in at 1.1260 and 1.1450. A daily close below 1.1050 would have us looking for a sell signal for a potential move down to 1.0850.

EURUSD key levels in focus ahead of FOMC

GBPUSD continues to respect this ascending channel that I mentioned in the weekend commentary. The pair recently came into confluent support at 1.5500. This area is represented by channel support in combination with the April high.

There isn’t much to do at the moment in terms of favorable price action, however we can keep an eye on the 1.5500 area for bullish price action in the wake of today’s FOMC.

I will remain cautiously bullish here as long as we maintain the 1.5500 level. Break channel support and we could see a return to the 1.5330 level.

Summary: Watch for bullish price action in the 1.5500 area. Key resistance comes in at the recent high at 1.5815. A break of channel support could trigger a move down to 1.5330.

GBPUSD ascending channel on the daily time frame

Last but not least is USDCAD. I have covered this pair several times over the last week due to the recent bullish breakout from the falling wedge that began forming on April 21st.

The pair managed to break wedge resistance on May 18th and subsequently broke horizontal resistance yesterday at 1.2200. We can now watch for this level to act as support during today’s FOMC. Any bullish price action on the daily time frame could present a favorable buying opportunity.

Key resistance comes in at 1.2305 and former range support at 1.2380. A daily close below 1.2200 would trigger a move back down to the 1.2100 level.

Summary: Watch for bullish price action from 1.2200. Key resistance comes in at 1.2305 and 1.2380. A daily close below 1.2200 would expose the next key support at 1.2100.

USDCAD breakout from falling wedge pattern

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