EUR/USD Forecast: Riding on the dollar's weakness and eyeing 1.1490

EUR/USD continues its gradual uptrend, reaching the mid 1.1400s. The primary driver is the anticipation for a dovish Fed decision that weakens the US Dollar.

The world's most powerful central bank is not expected to announce any policy changes in its meeting on Wednesday. However, there is a growing expectation that Fed Chair Jerome Powell will hint an early end to the balance sheet reduction program. With more greenbacks floating in the global system, the dollar is worth less. The focus on the balance sheet increased after a report in the Wall Street Journal on Friday suggested that officials are mulling a change.

See: Fed Preview: All about the balance sheet - 3 scenarios for the decision and the reaction

Trade is also higher on the agenda. Chinese Prime Minister Liu He has arrived in the US for trade talks and is scheduled to meet US President Donald Trump. The mood has soured after the US charged Huawei, a prominent Chinese telecommunications and phone-maker, of stealing trade secrets and bank fraud. They are also moving forward with the extradition of Meng Wangzhou, the CFO of the company and the single child of the founder.

After an initial risk-off sentiment, the market mood improved, thus not weighing on EUR/USD. 

In the old continent. European Central Bank President Mario Draghi repeated familiar messages in a lengthy testimony in front of the European Parliament. He stroke a balance between factors related to the slowdown and encouraging signs from the labor market. Spain, the euro zone's fourth-largest economy, reported a slight drop in the jobless rate to 14.5% in Q4 2018.

The calendar is quite light today, with the US Conference Board Consumer Confidence standing out with an expected drop.

See: CB Consumer Confidence Preview: Strength through adversity

In the UK, Parliament is set to vote on several amendments to the government's Brexit plan. Uncertainty remains high. Any significant moves in the pound may influence the euro.

Any news related to trade will likely dominate as markets continue zooming in on the Fed. 

EUR/USD Technical Analysis

EUR/USD has moved to a higher range, keeping a safe distance from the 200 Simple Moving Average on the four-hour chart. It also trades above the 50 SMA, Momentum remains positive, and the Relative Strength Index (RSI) points to the upside. All in all, bulls are in control.

1.1445 was the recent high and serves as the first cap. Further resistance awaits at 1.1490 which capped the pair earlier in the month. This level is the next target for EUR/USD.

1.1540 and 1.1570 served as resistance in the early days of the year.

1.1420 is the bottom of the recent range. It is followed by the round number of 1.1400 which provided some support early in the week. 1.1355 was a swing low on several occasions in mid-January, and it is followed closely by 1.1340 that supported euro/dollar last week.