EUR/USD Strengthens Over 1.1011, Weakens Under 1.0963

The Euro is trading higher against the U.S. Dollar on Wednesday after Russian Foreign Minister Sergei Lavrov said peace talks with Ukraine were not easy but there was hope for compromise.

Lavrov said that some deals with Ukraine were close to being agreed, with neutral status for Kyiv under “serious” consideration. Meanwhile, Ukrainian President Volodymyr Zelensky said the talks were sounding more realistic but more time was needed.

At 13:50 GMT, the EUR/USD is trading 1.0991, up 0.0035 or +0.32%. The Invesco CurrencyShares Euro Trust ETF (FXE) is at $101.97, up $0.33 or +0.33%.

The price action suggests Euro investors may have fully-absorbed the widely expected Federal Reserve 25-basis point rate hike. Nonetheless, the market moving event later in the session could be the announcement of the Fed’s plans for additional rate hikes throughout the year. Some analysts are pricing in as many as 6 or seven rate hikes this year.

The Fed will announce its interest rate decision and economic projections at 18:00 GMT, which will be followed by a briefing from Federal Reserve Chair Jerome Powell.

I am looking for the Fed to sound a little more hawkish than expected. This could limit today’s gains by the EUR/USD, or turn today’s gains into a loss by the end of the session.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1121 will change the main trend to up. A move through the new main bottom at 1.0901 will reaffirm the downtrend with 1.0806 the next target.

The EUR/USD is currently trading inside a pair of 50% levels at 1.0963 and 1.1011. On the upside, the nearest resistance is another pair of 50% levels at 1.1098 and 1.1151.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Wednesday is likely to be determined by trader reaction to 1.1011 and 1.0963.

Bullish Scenario

A sustained move over 1.1011 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into 1.1098 to 1.1151. Inside this zone is the main top at 1.1121.

The 50% level at 1.1151 looks like the trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 1.0963 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into the main bottom at 1.0901.

Taking out 1.0901 will change the main trend to down, and could trigger an acceleration into the next main bottom at 1.10806.

Side Notes

Aggressive counter-trend buyers are trying to form a potentially bullish secondary higher bottom.