The dollar trades generally higher across the board, although the EUR/USD pair holds near its daily opening, as the countdown towards the FED decision began. The release of European PMIs showed that Germany manufacturing and services PMIs continued growing in December, although resulting slightly below the November readings. In the EU, the preliminary Markit readings also posted solid results, with Manufacturing rising up to 53.1 from a previous 52.8.
Markets' attention, is centered in the upcoming FED´s decision by the end of the American afternoon, as the Central Bank is largely expected to raise rates for the first time in nine years. The announcement should not come as a surprise for the markets, but can well trigger will moves anyway.
Investors will be paying attention then to the economic forecast, and any comment on the pace of the upcoming moves. The most expected scenario is Yellen reiterating that the pace will be slow and data dependant, matching market's expectations and therefore producing the smallest effect.
View the Live chart of the EUR/USD
The level to watch, in the case of a dollar rally, is 1.0880, the 38.2% retracement of the October/December decline, with a break below it probably leading to additional declines towards the 1.0800 price zone. Above 1.0950, on the other hand, the pair can rally up to 1.1000, whilst above this last the 1.1040/60 region is next.
Latest updates on the EUR/USD Forecast
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