EUR/USD Price Forecast – EURO Awaits Cues From Fed For Breakout Trigger

EURUSD pair yesterday closed unchanged after experiencing a zig-zag price action. The pair traded with slight bullish bias across Asian market hours and hit new two week highs, however European market hours saw the pair move away from intra-day highs and hit intra-day lows at 1.1411 on headlines from UK which hinted as Brexit proceedings getting messy once again. However worse than expected reading in U.S. CB Consumer confidence data combined with broad-based US dollar weakness ahead of FOMC update helped the pair rebound from intra-day lows and close for the day positive note. The pair continues to remain locked in small price band as price action remains sandwiched between weekly highs and lows with no signs of breakout despite clear signs that EURO bulls have upper hand.

FOMC Update is Key Event Of The Day

Investors in the broad market continue to exercise caution ahead of today’s FOMC interest rate update and Sino-U.S. trade talks. This cautious stance has led to investors holding back from placing major bets ahead of the outcome of two key most watched events of the week. U.S justice department’s decision to pursue legal proceedings ahead of high-level talks between China & U.S. is the main reason for caution in the broad market. However, investor’s immediate focus is on US FOMC update scheduled later today. The Fed is expected to keep interest rate unchanged however investors await forward guidance from Fed Chair Jerome Powell’s speech given headlines from earlier this week which hinted at Fed’s decision to end their balance sheet shrinking process which has been going on for two years now. As of writing this article, EURUSD pair is trading at 1.1446 up by 0.14% on the day.

If Powell confirms the market belief that the Fed is planning to stop rate hike plans for 2019 instead of delaying it as announced earlier EURO bulls will get further support needed to create a bullish breakout. While there is a clear lack of fundamental support for EURO bulls in immediate market, given US dollar’s current state in the broad market any further increase in bearish pressure could give EURO a short term bullish boost. Ahead of today’s US market hours, investors are also on the lookout for macro data from EURO area for short term directional cues. The European market will see the release of French GDP data, German GFK consumer climate, CPI data. On the other side of the Atlantic, aside from FOMC update US market will also see the release of Pending home sales data, ADP NFP data, and Preliminary Q4 GDP data. While Euro area macro data could provide some short term impetus, US Dollar’s price action dynamics in the broad market will continue to remain the main driving force of the pair for rest of the week.