EUR/USD side-lined near 1.1760, FOMC in focus

The EUR/USD pair extends the overnight consolidative mode into early Europe, as markets await fresh direction from the FOMC rate decision due later today at 1800 GMT.

EUR/USD: All eyes on FOMC

A typical pre-Fed caution trading prevails, leaving the EUR/USD pair confined within a 15-pips narrow range, as markets refrain from placing any directional bets on the US dollar. A 25ps Fed rate hike is already priced-in, however, it’s will be the Fed’s forward guidance and tone of the statement that will set the tone for the markets in the coming months.

Meanwhile, the common currency continues to consolidate the gains induced by the ECB President Draghi’s hawkish comments, despite the central bank’s Chief Economist Praet’s attempt to downplay Draghi’s hawkish take on the inflation outlook. The ECB President said that the underlying inflation pressures picking up at an Economic forum.

More so, the sentiment around the Euro remains somewhat undermined, as the Italian budget conflict rages and brings uncertainty back into the markets. Italy budget: Five Star is reportedly threatening to block budget plan

Looking ahead, tight trading ranges will remain underlying amid a lack of fundamentals from the Euroland while the US new home sales could offer some incentives ahead of the Fed verdict.

EUR/USD Technical Levels

According to Karen Jones, Analyst at Commerzbank, “EUR/USD continues to probe the 1.1790/1.1803 resistance area – we are awaiting a close above 1.1790 which should be enough to trigger a move to the 1.1853 mid-June high and the 1.1904 55 week ma. Directly above here lies the 200-day ma at 1.1946 and we would allow for some profit taking there. We continue to view the August low at 1.1301 as a significant turn for the market. The market stays bid above the 1.1674 near-term support line and we will again tighten our stops on long positions. The cross will need to drop sub 1.1508 to alleviate immediate upside pressure. Where are we wrong? A drop below the 1.1508 June low would retarget the August low at 1.1301.”