EUR/USD defends 20-month MA for the third consecutive month
- The EUR/USD pair defended the 20-month moving average (MA) support in the past three consecutive months.
- The pair may pick up a strong bid if the Fed adopts a cautious tone.
The EUR/USD could be in for a stronger rally to 1.20, having defended the 20-month moving average for the third straight month in July.
The monthly chart shows the currency pair has charted back-to-back doji candles along the 20-month MA support, signaling indecision or bearish exhaustion following a drop from the February high of 1.2556.
Consequently, the common currency looks overdue for a corrective rally. At press time, the EUR/USD is trading at 1.1680.
Focus on the Fed
Federal Reserve (Fed) is expected to keep interest rates unchanged at 1.75-2.00% today, having lifted borrowing costs by 25 basis points in June. The absence of a post-meeting press conference and new economic projections also makes the July meeting a less exciting event.
Nevertheless, investors will scan the policy statement for clues on whether the US President Trump's criticism of rate hikes is forcing the Fed to adopt a more tempered tone.
The EUR/USD could rise if the Fed tempers hawkish tone. On the other hand, the pair may fall back to the key support of 20-month MA, currently located at 1.1623 if the central bank downplays trade war fears and retains hawkish rhetoric.
EUR/USD Technical Levels
Resistance: 1.1747 (previous day's high), 1.1791 (July 6 high), 1.1852 (June 14 high).
Support: 1.1674 (50-day moving average), 1.1620 (lower Bollinger Band as per the daily chart), 1.1508 (June 21 low).
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
