EUR/USD: Awaited FOMC Decision Sparks Mild Negative Bias

EUR/USD: Awaited FOMC Decision Sparks Mild Negative Bias


EUR/USD is currently trading with a slight negative bias on Wednesday, influenced by a modest uptick in USD strength. The currency pair's downside, however, is cushioned as market participants eagerly await the crucial Federal Open Market Committee (FOMC) policy decision. The focus will subsequently shift to the European Central Bank (ECB) monetary policy meeting scheduled for Thursday.

FOMC Policy Decision Anticipation:

Traders are on standby for the outcome of the highly-anticipated two-day FOMC policy meeting, with the decision expected later during the US session. The consensus is for the Fed to maintain the status quo, a stance universally anticipated by market participants. Recent economic indicators, including a robust monthly jobs report and consumer inflation figures, have led traders to scale back expectations for an early policy easing by the Fed. This, coupled with positioning adjustments ahead of the central bank event, supports the USD and exerts downward pressure on the EUR/USD pair.

Technical Analysis and Bearish Situation:

From a technical perspective, the EUR/USD remains in a bearish situation. Despite a brief attempt to reverse direction following the CPI data, the currency pair faced resistance, failing to sustain the pullback. In the H4 timeframe, the price is positioned below the 50 SMA, indicating a range-bound situation. Today's FOMC decision is anticipated to provide clarity and potentially trigger a directional move. Our analysis leans towards a strong USD, expecting a USD/JPY rally that could influence all USD pairs for a bullish impulse.

As traders await the FOMC decision, the EUR/USD exhibits a mild negative bias amid a moderately stronger USD. The technical analysis points to a bearish scenario, with the 50 SMA acting as a crucial resistance level. The FOMC decision is poised to set the tone for the currency pair's near-term direction, with the potential for a USD rally influencing market dynamics. Traders should remain vigilant and adapt their strategies based on the outcome of the central bank events.


Our preference

Short positions below 1.08300 with targets at 1.0750 & 1.0730 in extension.