EUR/USD: Bulls poised to regain 1.2300 ahead of Fed meeting

Testing stiff resistance located near 1.2285 region.
Powell’s speech holds the key for further upside.

Dhwani Mehta FXStreet

The EUR/USD pair is on a steady recovery mode from 1.2240 levels so far this Thursday, as the bulls make a comeback amid fresh USD selling across the board.

The US dollar came under fresh selling pressure against its major rivals in Europe, as markets readjust their positions ahead of the key FOMC risk event, with a 25 bps rate hike already discounted by markets accompanied by a hawkish Dot plot chart.

Moreover, the latest report, cited by Livesquawk, Federal offices have been closed in Washington, DC, brought the US Government shutdown fears back in play ahead of Friday’s stopgap funding bill deadline.

Despite the upbeat tone, the spot appears to face stiff resistance near the 5-DMA and NY top confluence zone of 1.2285 levels, making it difficult for the EUR bulls to test the 1.23 handle. Also, a typical pre-Fed meeting caution trading cannot be ruled, which could leave the rates in a consolidative mode below the 1.2300 mark.

EUR/USD levels to watch

FXStreet’s Analyst, Omkar Godbole, notes: On the weekly chart, “Back-to-back doji candles with long upper shadows and a bearish 5-week MA and 10-week MA crossover, coupled with the negative MACD indicates the EUR/USD will likely take out the ascending trend line (drawn from the April 2017 low and November 2017 low) support and drop to 1.20 (psychological support) in the short-run. On the higher side, only a close above 1.2446 (March 8 high) would abort the bearish view and could yield a re-test of 1.25-1.2556 (Feb. 16 high).”

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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