EUR/USD probing 1.2260 while the technical picture is uncertain

The EUR/USD is trading at around 1.2260 down 0.60% on the day as the US dollar is having a boost jumping from 89.86 to 90.32 in the US session and currently consolidating at around 90.20.

The Fed started its two-day policy meeting on Tuesday and a rate decision will be due on Wednesday at 18.00 GMT. In the meantime, the yield on the 2-year Treasury note climbed to a nine-year high and gold edged lower.

Earlier in the EU session, the data from the ZEW survey has not been exactly rosy as the index dropped to 5.1 from 17.8 in February and 20.4 in January, falling to its lowest level since late 2016. The stock market deceleration along with bond yields and a weaker Euro and the upcoming political event have likely tempered investors’ appetite in the short term but not changed the overall picture according to ING.

All eyes are on the FOMC rate decision on Wednesday where Powell will offer more information about the path of rate hikes throughout 2018. A 25bps rate increase is now virtually a done deal amongst most market participants with a probability of 94.4% according to the CME Group Fed watch. 

EUR/USD daily chart

The EUR/USD is currently treading water at 3-day’s low probing the 1.2260 level while rejected from the 50-period simple moving average. The daily MACD is bearishly configured as well as the RSI, both pointing downward. Intraday support is seen at 1.2260, 3-day low followed by 1.2200 previous supply/demand zone while resistance is seen at 1.2360 3-day high, followed by 1.2450, a cyclical high.