EUR/USD Daily Forecast – Euro Rally Slows Ahead of Fed Meeting

EUR/USD posted a small loss yesterday to end a seven consecutive day bullish streak. Nevertheless, the pair has posted gains in 11 out of the past 13 days.

It does not appear that the Fed will ease further today, despite a notable rise in Coronavirus cases since it last met. Rather, policymakers my reiterate that they stand ready to support the economy for as long as it’s needed.

The US economy could see further stimulus from the government as plans for a package worth about $1 trillion were released earlier in the week. The proposal includes another $1200 check for US citizens. However, the emergency unemployment benefit is expected to decline to $200 from its current $600 per week.

Today’s Fed meeting stands to have an impact on EUR/USD which is stretched at this point by any measure. The pair is up about 4.5% on the month thus far. It hasn’t had a rally of this magnitude in over four years.

Aside from today’s Fed meeting, GDP data from both the US and Europe are scheduled for release this week. Both these reports are advanced readings, or in other words, the first estimate of GDP for the second quarter. As such, the readings typically accompany volatility.

Technical Analysis

EUR/USD is currently facing resistance as it trades near a horizontal level that had held it lower during a lengthy consolidation that took place in 2018.

Even if the pair manages to scale above this resistance following the Fed meeting, the daily and weekly close relative to it will be important.

If the pair pulls back from here, notable support is seen at 1.1613 as the level offered support during periods in both 2017 and 2018.

To the upside, the 100-month moving average comes into play at 1.1883. This could turn out to be a strong ceiling were the pair to continue higher.

Bottom Line

• Upside momentum has slowed in EUR/USD after it broke to a 22-month high earlier in the week.
• The Fed will announce its latest monetary policy decision and hold a press conference during the North American session.

For a look at all of today’s economic events, check out our economic calendar.