EUR/USD Lacks Momentum Ahead Of Fed Interest Rate Decision

Key Insights

• EUR/USD is trading near 1.0960 as traders wait for the Fed’s decision.
• U.S. Retail Sales data may also have an impact on currency dynamics. 
• A move above 1.0960 will push EUR/USD back to the resistance at 1.1000.

Euro Is Mostly Flat Against U.S. Dollar

EUR/USD is currently trying to settle back above the resistance at 1.0960, while the U.S. dollar is moving lower against a broad basket of currencies.

The U.S. Dollar Index remains stuck in the range between the support level at 98.70 and the resistance level at 99. In case the U.S. Dollar Index manages to settle back above the 99 level, it will gain upside momentum and head towards the next resistance at 99.20, which will be bearish for EUR/USD.

Yesterday, EU reported that Euro Area ZEW Economic Sentiment Index declined from 48.6 in February to -38.7 in March. Euro Area Industrial Production declined by 1.3% year-over-year in January, while analysts expected that it would drop by 0.5%.

Today, foreign exchange market traders will focus on the Fed Interest Rate Decision. The Fed is expected to start raising rates, and the market will pay extra attention to Powell’s commentary which could provide more information on the Fed’s future policy. Traders will also take a look at the U.S. Retail Sales report, which is expected to show that Retail Sales increased by 0.4% month-over-month in February.

Technical Analysis

EUR/USD is testing the resistance level at 1.0960. If this test is successful, EUR/USD will move towards the next resistance at 1.1000.

A move above the resistance level at 1.1000 will push EUR/USD towards the next resistance at 1.1035. In case EUR/USD manages to settle above this level, it will head towards the next resistance at the 20 EMA at 1.1050.

On the support side, a move below 1.0960 will push EUR/USD towards the support level at 1.0930. If EUR/USD declines below this level, it will head towards the support at 1.0900. A successful test of the support at 1.0900 will open the way to the test of the support at 1.0885.

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