EUR/USD MId-Session Technical Analysis for November 3, 2021

The Euro is inching higher against the U.S. Dollar on below average volume on Wednesday as traders await key decisions from the U.S. Federal Reserve at 18:00 GMT.

The Fed is expected to announce it will stop trimming its massive stimulus put in place at the start of the pandemic in March 2020, but the certainty stops there.

Traders will be looking for clues from policymakers about inflation, the timing of the first post-pandemic rate hike and the frequency of additional rate hikes. All will be sources of potential volatility.

At 11:16 GMT, the EUR/USD is trading 1.1586, up 0.0007 or +0.06%.

Hotter-than-anticipated inflation has ramped up expectations that the Fed will fight the trend of higher prices by beginning to raise interest rates next year, about six months sooner than the last Federal Reserve forecast.

Traders are currently pricing in more than two interest rate hikes for next year, while the majority of Fed officials do not even see one in 2022 in their recent forecast.

The Euro could plunge if the Fed announces an aggressive two to three rate hike timetable. The Fed may even decide it needs more time or even a blend of the two possibilities. With uncertainty building ahead of the announcements, traders should brace for heightened volatility.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1524 will reaffirm the downtrend, while a move through 1.1692 changes the main trend to up.

The minor range is 1.1524 to 1.1692. Its 50% level or pivot at 1.1608 is resistance.

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

The main range is 1.1909 to 1.1524. Following a change in trend, its retracement zone at 1.1717 to 1.1762 will become the primary upside target.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Wednesday will be determined by trader reaction to 1.1608.

Bearish Scenario

A sustained move under 1.1608 will indicate the presence of sellers. If this creates enough downside momentum then look for a test of last week’s low at 1.1535. Taking out this level will lead to a test of the main bottom at 1.1524.

The main bottom at 1.1524 is a potential trigger point for an acceleration to the downside with the July 16, 2020 main bottom at 1.1371 the next major target.

Bullish Scenario

A sustained move over 1.1608 will signal the presence of buyers. This could trigger a quick surge into 1.1640. Overcoming this level could trigger an even stronger rally into the main top at 1.1692.

Taking out 1.1692 with strong volume will change the main trend to up with 1.1717 to 1.1762 the next key target zone. This area is controlling the near-term direction of the EUR/USD.