EUR/USD Price Forecast: Static ahead of Federal Reserve’s decision

EUR/USD Current price: 1.0497

• The Federal Reserve’s announcement keeps markets in wait-and-see mode.
• The Eurozone downwardly revised the October HICP to 2.2% YoY.
• EUR/USD is technically neutral-to-bearish as investors await the Fed.

The EUR/USD pair trades lifeless around the 1.0500 mark as the Federal Reserve’s (Fed) monetary policy announcement looms. Financial markets turned risk-averse ahead of the event, with Wall Street experiencing sharp losses on Tuesday amid speculation that the Fed’s monetary loosening may soon slow down. Uncertainty of what the bank may do after this meeting, weighing in the return of Donald Trump to the White House, undermined the mood.

Nevertheless, Asian indexes shrugged off the dismal mood and started the day with optimism, although indexes ended up mixed. European ones, in the meantime, stand in the green as investors adopted a wait-and-see stance.

Data-wise, the Eurozone published the final estimate of the October Harmonized Index of Consumer Prices (HICP), confirmed at  2.2% year-on-year (YoY), below the previous estimate of 2.3%. The core annual reading matched the previous estimate at 2.7%.

The United States (US) calendar offers some minor figures, irrelevant ahead of the Fed’s decision. The country released MBA Mortgage Applications for the week ended December 13, which fell by 0.7% against the previous 5.4% advance. Coming up next are November Building Permits and Housing Starts.

The Fed will come then, and the central bank is widely anticipated to trim the benchmark interest rate by 25 basis points (bps). Alongside the announcement, officials will release the Summary of Economic Projections (SEP) or dot plot, while Chairman Jerome Powell will offer a press conference afterwards. The SEP and Powell’s words will be scrutinized for clues about future monetary policy decisions.

EUR/USD short-term technical outlook

The EUR/USD technical picture is neutral, albeit the risk skews to the downside. In the daily chart, the pair keeps finding sellers around a mildly bearish 20 Simple Moving Average (SMA)  at around 1.0520, while the 100 and 200 SMAs gain downward traction far above the shorter one. At the same time, the Momentum indicator holds flat, just below its 100 line, while the Relative Strength Index (RSI) indicator consolidates at 41, reflecting the lack of directional interest.

In the near term, the EUR/USD pair is neutral-to-bearish. Moving averages are flat and within a tight range, reflecting the latest range trading. At the same time, the pair is below the 20 SMA, which stands below the longer ones, in line with persistent selling pressure. Finally, technical indicators have turned flat within negative levels, suggesting bears paused but hold the grip.

Support levels: 1.0460 1.0410 1.0375

Resistance levels: 1.0520 1.0570 1.0625