EUR/USD Forecast: Looming Fed’s decision limits price action
|EUR/USD Current price: 1.0786
- Markets in wait-and-see mode ahead of the Federal Reserve monetary policy announcement.
- Eurozone Industrial Production contracted by more than anticipated in October.
- EUR/USD poised to extend its slump, strong static support level at 1.0732.
The US Dollar trades with a firmer tone on Wednesday, and ahead of the Federal Reserve (Fed) monetary policy decision. The EUR/USD pair met sellers around the 1.0800 mark and trades a handful of pips below the level mid-European session. The Fed is widely anticipated to keep interest rates unchanged for a third consecutive meeting, somehow confirming the end of the monetary tightening cycle without explicitly stating so.
At the same time, the central bank will release the Summary of Economic Projections (SEP), which may provide fresh clues on what policymakers expect for the next couple of years. The focus will be on the Fed funds rate, as it would indicate how willing policymakers are to pivot and proceed with rate cuts. Growth and inflation perspectives will also be relevant in terms of price action.
Meanwhile, the Eurozone released October Industrial Production, which declined by 0.7% MoM and contracted by 6.6% from a year earlier.
EUR/USD short-term technical outlook
The EUR/USD pair trades just below the 38.2% Fibonacci retracement of the 1.0447/1.1016 rally at 1.0800. The 50% retracement provides support at 1.0732, a couple of pips above the weekly low. From a technical perspective, the pair is bearish in the daily chart. Sellers rejected Tuesday’s advance around a flat 200 Simple Moving Average (SMA) at around 1.0830, while the 20 SMA gained downward traction above the longer one. Technical indicators, in the meantime, turned lower within negative levels, skewing the risk to the downside without confirming it.
In the near term, and according to the 4-hour chart, EUR/USD is neutral-to-bearish. The pair is trapped in a tight range defined by directionless 20 and 200 SMAs, while the 100 SMA gains downward traction above them. Finally, technical indicators aim marginally lower around their midlines, reflecting the absence of directional conviction.
Support levels: 1.0730 1.0680 1.0640
Resistance levels: 1.0830 1.0860 1.0900
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