EUR/USD forecast: Bullish only above a short-term descending trend-line, FOMC in focus

The EUR/USD pair regained strong positive traction on Tuesday and recovered all of its losses recorded in the previous session amid some renewed selling bias surrounding the US Dollar. The shared currency initial got a minor boost from the release of German ZEW survey results, showing that Business Sentiment improved by more-than-anticipated to -22.5 in September from the previous month's awful reading of -44.1. Adding to this, the broader Euro-zone ZEW Economic Sentiment recovered to -22.4 during the reported month, from -43.6 previous, which largely negated the weaker assessment of the current situation in Germany and the whole Union.

Renewed USD weakness remained supportive

From the US, data released on Tuesday showed that August Industrial Production and Manufacturing Production expanded at a monthly 0.6% and 0.5%, respectively, and surprised markets to the upside. Also, Capacity Utilization came in above estimates and climbed to 77.9% during the reported month, albeit did little to impress the US Dollar bulls. The intraday positive move accelerated further on the back of improving risk sentiment after Saudi Arabia's energy minister said the kingdom has tapped inventories to restore oil supplies to where they stood before drone attacks over the weekend, which shut around 5% of the global oil output.
 
The pair finally settled near the top end of its daily trading range, around the 1.1070-75 region, albeit lacked any strong follow-through and eased a bit during the Asian session on Wednesday as the focus remains firmly on the highly anticipated FOMC decision, scheduled to be announced later during the US trading session. Heading into the key event risk, the final Euro-zone consumer inflation (CPI) readings for August might influence the shared currency and produce some short-term trading opportunities, though is likely to be overshadowed by the pre-Fed repositioning trade.
 
The US central bank is universally expected to deliver a 25 bps interest rate cut and is unlikely to surprise the market. Hence, the key focus will be on the accompanying monetary policy statement and updated economic projections. This will be followed by the post-meeting press conference, where the Fed Chair Jerome's comments will play a key role in determining the pair's near-term trajectory. Given the recent dovish bias from the European Central Bank (ECB), any hawkish tilt might be enough to reignite the recent USD bullish run and derails the pair's recent recovery move from yearly lows.

Short-term technical outlook

From a technical perspective, nothing seems to have changed much and the pair still needs to decisively breakthrough a near three-month-old descending trend-line resistance in order to increase prospects for any further near-term recovery. Above the mentioned barrier, just ahead of the 1.1100 round-figure mark, the pair seems all set to surpass an intermediate resistance near the 1.1145 horizontal zone and aim towards challenging 100-day SMA near the 1.1180 region en-route the 1.1200 handle.
 
On the flip side, the 1.1050-45 region now seems to act as immediate support, which if broken might turn the pair vulnerable to accelerate the slide back towards challenging the key 1.10 psychological mark. Sustained weakness below the mentioned handle should pave the way for the resumption of the pair's prior/well-established bearish trend and accelerate the slide back towards challenging 2019 swing lows support near the 1.0925 region.