The currency pair remains above 0.9000 due to broad buying of the U.S. dollar. It recently hit a high of 0.90119 and is currently trading around 0.8999. The intraday bias is bullish as long as the support level at 0.8890 holds.
Fed's Updated Rate Cut Predictions
The Federal Reserve has revised its 2025 projections, now expecting only two rate cuts instead of four due to ongoing inflation concerns. They foresee lowering the federal funds rate by a total of 0.5 percentage points, targeting a rate of 3.9% by the end of the year. According to the Fed's dot plot, 14 out of 19 officials anticipate two or fewer quarter-point cuts in 2025, indicating a cautious approach to easing rates amid uncertainty about economic policies' impact on inflation. The next FOMC meeting is scheduled for January 28-29, 2025, where further insights will be provided.
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Technical Indicators for Potential Uptrend
The pair is trading above both the 34-EMA and 55-EMA on the 4-hour chart, suggesting a potential uptrend. The next resistance level to watch is at 0.9030; a breakthrough could lead to targets at 0.9070 and 0.9100. If the pair drops below 0.8750, it would signal the end of the downtrend that started from 0.9225 and completed at 0.8375.
Support and Resistance Levels
Immediate support for the pair is at 0.8940. If this level is breached, the pair could decline to 0.8890, 0.8850, 0.8835, and 0.8600. Additional levels to monitor include 0.8580, 0.8550, 0.8525, and a significant Fibonacci projection at 0.8365.
Caution in Trading Strategy
The 4-hour chart shows a bullish trend in the Commodity Channel Index (CCI), but the Average Directional Movement Index (ADX) indicates a neutral trend, suggesting mixed signals for traders.
Recommended Trading Approach
It is advisable to consider buying on dips around 0.8978-80, with a stop-loss set at 0.8940 and a target price of 0.9070 for potential gains.
