EUR/USD Mid-Session Technical Analysis for November 2, 2021

The Euro is edging lower on Tuesday in a low volume trade that suggests the major players are moving to the sidelines ahead of tomorrow’s major U.S. Federal Reserve monetary policy decisions.

The Fed is widely expected to leave interest rates unchanged, but it is expected to approve plans to scale back its $120 billion monthly bond-buying program put in place to help the economy during the coronavirus pandemic, while investors will primarily focused on remarks about interest rates and how sustained the recent surge in inflation is.

At 13:46 GMT, the EUR/USD is trading 1.1595, down 0.0013 or -0.11%.

The Fed’s comments on the timing of its first rate hike and the frequency of subsequent increases will be the source of volatility. This is because of the number of forecasts floating out there ahead of the announcements. Basically, there are a lot of opinions out there.

On one hand, you have the Federal Funds futures market pricing in as many as three interest rate hikes in 2022. Goldman Sachs sees two rate hikes and others see the Fed as announcing the start of tapering but not giving traders any specific timing around a rate hike. I think the Fed will blend the two. I’m looking for tapering and a wait and see approach to the first rate hike. Remember the Fed also has a meeting in December.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1535 will signal a resumption of the downtrend. A move through 1.1692 will change the main trend to up.

The minor range is 1.1524 to 1.1692. The EUR/USD is currently testing its pivot at 1.1608.

The short-term range is 1.1755 to 1.1524. Its 50% level at 1.1640 is potential resistance.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD is likely to be determined by trader reaction to 1.1608.

Bearish Scenario

A sustained move under 1.1608 will indicate the presence of sellers. The first downside target is minor support at 1.1574. This is followed closely by a minor bottom at 1.1535 and a main bottom at 1.1524.

Aggressive counter-trend buyers could come in on the first test of 1.1524, but if it fails then don’t be surprised by an acceleration to the downside with 1.1371 the next major target.

Bullish Scenario

A sustained move over 1.1608 will signal the presence of buyers. This could trigger a surge into 1.1640. The latter is a potential trigger point for an acceleration into 1.1692.