The EUR/USD is trading lower shortly before the U.S. opening and the release of the U.S. Federal Reserve’s monetary policy statement at 1800 GMT. A rate hike in December is largely priced into the markets. However, investors will be looking for hints on the Fed’s stance on monetary policy: in particular, the inflation outlook and how the Federal Reserve wishes to respond.
Stated another way, investors want to know if the central bank is likely to adopt a “wait and see” mode or try to get ahead of the curve.
A hawkish Fed could put pressure on the EUR/USD. A more dovish-than-expected Fed could launch a short-covering rally.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through 1.1573 will signal a resumption of the downtrend. A move through 1.1661 will signal a shift in momentum to the upside.
The nearest support is a major Fibonacci level at 1.1610.
The best resistance is a potential price cluster at 1.1702 to 1.1705.
Daily Forecast
Based on the current price at 1.1638 and the earlier price action, the direction of the EUR/USD the rest of the session will be determined by trader reaction to the short-term uptrending angle at 1.1633.
A sustained move over 1.1633 will indicate the presence of buyers. This could trigger a fast rally into 1.1661. Overtaking this level could trigger an acceleration into the resistance cluster at 1.1702 to 1.1705, followed by the downtrending angle at 1.1712.
A sustained move under 1.1633 will signal the presence of sellers. This could lead to a labored break with potential targets at 1.1610, 1.1603 and 1.1588. The latter is the last potential support angle before the 1.1573 main bottom.
If the bottom at 1.1573 is taken out with conviction then look for a possible break into a long-term uptrending angle at 1.1525.