EUR/USD Is Flat Ahead Of Fed Interest Rate Decision

Traders Wait For Powell’s Comments

EUR/USD is currently trading near the 1.1300 level while U.S. dollar is flat against a broad basket of currencies.

The U.S. Dollar Index has recently managed to get below the 96 level and is trying to develop additional downside momentum. In case this attempt is successful, it will get to the test of the support at 95.75 which will be bullish for EUR/USD.

Today, U.S. will release New Home Sales data for December, but foreign exchange market traders will stay focused on the Fed Interest Rate Decision and the commentary from Fed Chair Jerome Powell.

The key question is whether Powell is ready to signal that Fed will raise rates more than 3 times in 2022. In previous months, it looked that Fed did not want to disappoint markets. However, inflation is a serious problem, and the Fed may abandon its dovish stance and focus on the battle against rising prices. In this scenario, U.S. dollar will get more support.

Technical Analysis

EUR/USD continues its attempts to settle below the support level at 1.1300. In case EUR/USD settles below this level, it will move towards the next support which is located near yesterday’s lows at 1.1270.

A move below the support at 1.1270 will push EUR/USD towards the support at 1.1230. In case EUR/USD declines below the support at 1.1230, it will head towards the support level at 1.1200.

On the upside, EUR/USD needs to stay above 1.1300 to have a chance to develop upside momentum in the near term. The next resistance level for EUR/USD is located at 1.1330.

In case EUR/USD gets above the resistance at 1.1330, it will get to the test of the next resistance level which is located at the 20 EMA at 1.1340. A move above the 20 EMA will push EUR/USD towards the 50 EMA at 1.1360, although EUR/USD may also face resistance near 1.1350.

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