FOMC meeting: loads of hope, but little action expected

The FOMC is starting its two-day meeting in which the US Central Bank will decide its next step when it comes to the economic policy. The greenback is weaker ahead of the meeting, as the FED is largely expected to remain on-hold. On top of this, the Central Bank head, Janet Yellen, is not expected to give a press conference after this particular meeting, and while she warned multiple times that a rate hike can be delivered in any meeting, soft macroeconomic data since the year started does not support a move in April. 

Nevertheless, there are some hopes that US policy makers will offer a hawkish stance in their statement, and signal  a possible rate hike for the next meeting in June. Given the absence of a press conference, it will be the wording in the FOMC statement what will decide the dollar's direction after the event. 

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Generally speaking, the FED is likely to remain comfortable about the employment sector, but will probably express concerns over inflation. They might also express their expectations that employment will only increase gradually later this year. What would be understood as hawkish, and therefore dollar's supportive, would be a statement bringing back that the risk to the outlook is balanced, or "nearly balanced". That was a phrase last seen in October, in the meeting before the December one, when the US Central Bank hiked rates for the first time in almost a decade. 

However, if the statement makes reference to the economic risks coming from outside -China- and depressed oil's prices, the market will run to price in a delay in any rate move. Expectations for the next move will slide towards December this year, therefore triggering another round of dollar's sell-off. 

Headlines right after the release could be tricky, as if "some," "many," or "most" FED officers agreed on economic conditions having improved enough to raise rates, or discussed about it, the greenback may get a temporal boost that can be later erased after a deeper read of the full statement. 

Anyway, it seems that beyond hopes, Yellen's hands are tied this April, and investors will have to keep on waiting for a decision, at least one more month.   

EUR/USD technical outlook

The EUR/USD pair is not far from the 1.1460 region, a major static resistance level and this month high, advancing ever since the week started, after a logical downward corrective move, which stalled at the 38.2% retracement of the latest bullish run between 1.0821 and 1.1464, at 1.1220. 

Now trading above the 1.1300 figure, the pair has an immediate resistance formed by multiple daily highs around 1.1380/90, and  further gains beyond it should lead to a test of the critical 1.1460 region, whilst beyond this last, the rally can extend up to 1.1500 in the short term, but leave then doors opened for a rally up to 1.1713, August 2015 monthly high. 

The immediate short term support comes at 1.1270, followed by the mentioned 1.1220 Fibonacci level. It seems unlikely that the pair can break below this last, unless the FED makes it clear that it will actually raise rates on June, with the next bearish target then at 1.1160.