EUR/USD: Focus on Fed's forward guidance

The EUR/USD is sidelined around 200-hour MA.
The demand for EUR puts is on the rise ahead of the Fed.
The focus is on the Fed's forward guidance as rate hike has been priced-in.

Omkar Godbole FXStreet Contributor

The EUR/USD traded in a sideways manner in Asia around the 200-hour moving average (MA) of 1.1746 as investors turned cautious ahead of the all-important FOMC rate decision.

The market widely expects the Fed to hike rates by 25 basis points and the rate hike has been priced-in. So the focus will on Fed's forward guidance.

The US dollar may pick up a strong bid, sending EUR/USD well below 1.17 if the Fed signals faster rate hikes and pushes up terminal rate forecasts. However, if Fed delivers a dovish hike, then the EUR/USD could revisit recent high of 1.1840.

Options data indicate the investors could be bracing for a hawkish forward guidance. The one-month 25 delta risk reversals hit 12-day low today, signaling rising demand or rising implied volatility premium for the EUR puts.

EUR/USD Technical Levels

The EUR/USD has made its way below short-term consolidation triangle, as seen in the 4-hour chart, signaling the bears are gaining the upper hand. The chart also shows the accelerated trendline has been breached.

Resistance: 1.1769 (4H 10MA), 1.1822 (bearish/falling 4H 200MA), 1.1840 (recent high).

Support: 1.1715 (4H 100MA), 1.1652 (support on 4H chart), 1.1510 (recent low).

4-hour chart

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD keeps the rangebound trade near 1.1850

EUR/USD is still under pressure, drifting back towards the 1.1850 area as Monday’s session draws to a close. The modest decline in spot comes as the US Dollar picks up a bit of support, while thin liquidity and muted volatility, thanks to the US market holiday, are exaggerating price swings and keeping trading conditions choppy.

GBP/USD flirts with daily lows near 1.3630

GBP/USD has quickly given back Friday’s solid gains, turning lower at the start of the week and drifting back towards the 1.3630 area. The focus now shifts squarely to Tuesday’s UK labour market report, which is likely to keep the quid firmly in the spotlight and could set the tone for Cable’s next move.

Gold sticks to a negative bias below $5,000; lacks bearish conviction

Gold remains depressed for the second consecutive day and trades below the $5,000 psychological mark during the Asian session on Tuesday, as a positive risk tone is seen undermining safe-haven assets. Meanwhile, bets for more interest rate cuts by the Fed keep a lid on the recent US Dollar bounce and act as a tailwind for the non-yielding bullion, warranting caution for bearish traders ahead of FOMC minutes on Wednesday.

AI Crypto Update: Bittensor eyes breakout as AI tokens falter

The artificial intelligence (AI) cryptocurrency segment is witnessing heightened volatility, with top tokens such as Near Protocol (NEAR) struggling to gain traction amid the persistent decline in January and February.

US CPI is cooling but what about inflation?

The January CPI data give the impression that the Federal Reserve is finally winning the war against inflation. Not only was the data cooler than expected, but it’s also beginning to edge close to the mystical 2 percent target. CBS News called it “the best inflation news we've had in months.”

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.