EUR/USD Forecast: Ready to move on the Fed, but beware Brexit

EUR/USD is trading around 1.1350 in a narrow range of fewer than 25 pips. Such limited volatility is to be expected on Fed Day. The US Federal Reserve is expected to leave interest rates unchanged but to provide more details on its pledge to remain "patient" on interest rates.

This March meeting features new forecasts on growth, inflation, employment, and most importantly, interest rates. Back in December 2018, the central bank signaled two rate increases in 2019. Since then, it has vowed to remain patient due to global headwinds while praising the local economy. 

While markets ruled out a rate hike this year, Fed officials have not closed the door on it. The Fed will likely downgrade the projection, but there is a material difference between one increase and zero. 

In addition, the FOMC may provide more details about the balance sheet reduction program. Will it end this year? In the previous meeting, Chair Jerome Powell and his colleagues said they will tackle it. They may provide more details now. The other forecasts, the statement, and Powell's press conference will all play a role in shaking currencies. 

See: 

• Federal Reserve Preview: Dots before our eyes
• Fed Preview: Three scenarios for the crucial dot-plot and four other things to watch

The Fed decision is at 18:00 GMT and until then, quite a few developments on Brexit can occur. The latest is that the UK PM Theresa May is set to ask for a short Brexit extension, to the dismay of the pro-Remain camp and the European Union. The topic may be discussed only next week, just before the current Brexit date, March 29th. 

The news sent the pound lower and it could impact the euro later on.

In the old continent, German PPI dropped by 0.1% and did not impact the common currency. The Fed and Brexit remain in the limelight.

EUR/USD Technical Analysis

EUR/USD is trading in a narrow range, capped by 1.1362 which was the two-week high achieved on Tuesday and 1.1340 seen earlier in the day. Upside Momentum is petering out and the Relative Strength Index is drifting to neutral once again. The pair trades above the 200 Simple Moving Average which comes out around 1.1325, another support line.

All in all, the technical picture is mildly bullish.

High resistance awaits at 1.1410 and 1.1420 which were peaks around the beginning of March and late February, respectively. Further above, 1.1485 awaits. 

Looking down, 1.1310 was a temporary cap on the way up last week and also coincides with the 50 SMA. 1.1295 and 1.1275 were support lines on the way up.