EUR/USD Price Forecast – EUR/USD near Monthly Low Ahead of US Fed Rate Decision

The EUR/USD traded in a sideways manner in Asia around the 200-hour moving average (MA) of 1.1746 as investors turned cautious ahead of the all-important FOMC rate decision. This month’s low is around 1.172 handle which the pair tested last week. The market widely expects the Fed to hike rates by 25 basis points and the rate hike has been priced-in. So the focus will be on Fed’s forward guidance. The US dollar may pick up a strong bid, sending EUR/USD well below 1.17 if the Fed signals faster rate hikes and pushes up terminal rate forecasts. However, if Fed delivers a dovish hike, then the EUR/USD could revisit recent high of 1.1840.

EURUSD Lower But Likely to Be Bullish Later

So far the price action in EURUSD indicates possible hawkish rate hikes during today’s FOMC meet. EUR/USD dropped from 1.1772 to as low as 1.1732 on the noise during north American market hours, a move that could well be cleaned up by the committed bulls given that there could have been some misunderstandings that it was a newly written rule. The point is, the Fed is on the move and that is underpinning the greenback while there are still many uncertainties to the direction of their counterpart’s monetary policy in major global central banks.

On release front, in US calendar Core CPI data in both monthly & yearly basis and Real Earning (May) turned out with positive results while European calendar saw German and Euro Zone economic sentiment and current sentiment data turn out worse than expected. Also Non-Farm Payroll data in France saw negative outcome which greatly influenced Euro’s slide during yesterday’s trading session. European calendar remains relatively silent except for Industrial productions data while US calendar has a bounty of news to watch out for such as PPI, Crude Oil Inventory and FOMC decision updates. All macro data scheduled to release in US markets today have hawkish forecast which could turn momentum greatly in favors of US greenback if data comes in line with forecasts. Expected support and resistance for the pair are at 1.1715 / 1.1680 / 1.1640 and 1.1780 / 1.1810 / 1.1850 respectively.