EUR/USD Forecast: waiting for the Fed

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1429

US Federal Reserve upcoming monetary policy decision keeping investors sidelined short-term.
EUR/USD losing upward strength could retest yearly lows soon.

The EUR/USD pair returned to the lower end of the 1.1400 band now trading around 1.1420 where it was before the US mid-term elections triggered a dollar's sell-off that sent it up to 1.1500. There was no particular catalyst for the EUR decline, rather linked to a weaker Pound amid mounting Brexit tensions, and the upcoming US Federal Reserve announcement. Meanwhile, the conflict between the EU Commission and Italy about the budget deficit of the country remains unsolved. Italy insists that the maximum deficit will be of 2.4%, while the EC sees it at 2.9%, having already rejected the draft. Italian FM Tria said that the EU forecast in sharp contrast with the government´s estimates due to the partial reading of the budget.

US FOMC members are undergoing a monetary policy meeting, and their decisions will be unveiled in the American afternoon. The central bank is largely expected to keep rates on hold and the accompanying statement will be scrutinized for clues on what's beyond a December hike, already priced in. The US just released Initial Jobless Claims for the week ended November 2, which resulted as expected as 214K.

The 4 hours chart for the pair shows that its currently struggling with the 23.6% retracement of the September/October decline, also with converging 20 and 100 SMA. Technical indicators in the mentioned chart have stabilized right above their midlines, now aiming to regain the upside, somehow indicating limited selling interest. The pair bottomed at 1.1403 so far today, with renewed selling interest below it exposing the yearly low at 1.1300. The pair could regain its bullish stance on a firm recovery above 1.1460.

Support levels: 1.1400 1.1350 1.1300

Resistance levels: 1.1460 1.1495 1.1520

View Live chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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