Before the Fed's meeting to be held today, asset purchases will be discussed, the risk appetite is somewhat positive in the markets. While the Fed, which has been displaying a dovish tone for a while, is not expected to make any changes in interest rates, there is an expectation that it will probably not bring a new dimension to the asset purchase program. Especially with the June inflation data coming in at 5.4 percent, the increased risk of inflation and the recent slight weakening in the economy may lead the Fed to maintain its wait-and-see policy. While Fed Chairman Powell is expected to keep his statement that inflation is temporary for a while, phrases regarding inflation and the potential for a warming effect on the economy are critical in the content of the statements to be made tomorrow. The timing expectation of the Fed to increase interest rates and reduce asset purchases, although 2023 and 2022 respectively, may cause a recovery in the economy to keep 2022 on the table. It is within the expectations that the Fed, which we expect to monitor the markets in particular, will give the first signal about tapering in order to reduce the imbalances that may occur over inflation at the next September meeting.
While the Fed's expectations will be postponed and the weak appearance of the dollar has supported the recovery movement in the EURUSD parity, this scenario has weakened a little today. At the ECB meeting held last week, the pigeon tone display drew attention. Following these developments, the weakening that may occur in the dollar assets with the meeting may bring the resistance levels of 1.1890 and 1.1950 to the agenda with a close above the 1.1834 level in the parity. However, we are gradually following the 1.17 and 1.1650 support levels below the 1.1770 level in a possible downside pressure.
It is seen that the parity, which climbed above the 1.39 level after the dollar increased its depreciation, had difficulty in providing permanence in closings above this level. Especially if the prices remain below the 1.39 level, this may cause the weak scenario to continue for a while. Below this level, we follow the 1.3855 and 1.38 support levels. However, 1.3970 and 1.4030 resistance levels will be important transition areas in a possible close above 1.39 level.