The euro/dollar pair is sitting at important pivot waiting on the results of FOMC statement and Eurozone economic reports, says Fawad Razaqzada, Market Analyst, Forex.com.
The forex markets have been rather quiet so far this week. However there have been a couple of exceptions. The pound, for example, fell noticeably yesterday after members of parliament backed a plan to renegotiate Theresa May’s Brexit deal with the EU, while the Australian dollar jumped on the back of slightly stronger Aussie inflation data overnight. However, the price action on all the other major currencies has been like watching paint dry, not least the EUR/USD. Indeed, the U.S. Dollar Index’s range so far this week has been 30 pips. Clearly, market participants have been in no rush to open meaningful positions in FX ahead of the FOMC rate decision this afternoon t and Friday’s U..S jobs report, not to mention the upcoming Eurozone data, including GDP (Thursday) and CPI (Friday). These events have the potential to move the FX markets sharply, so this could just be the quiet before the storm.
From a technical point of view, we already think that the Dollar Index is looking bearish in the short-term outlook. This makes us slightly bullish on the EUR/USD by default. But taking a closer look at the EUR/USD and we note that the sharp reversal we saw on Friday may have been a game-changer.
The brief drop below the 1.13 handle took us to a new low for the year, before rates reversed sharply to rally above the previous resistance at 1.1390. At the start of this week, the EUR/USD has held above this pivotal level but hasn’t exactly rallied away from it. The fading bullish momentum must be disheartening for the bulls. This is typical of a market being stuck in an ugly range, with both the bulls and bears not being in full control. Nonetheless, we have seen two further green closes after Friday’s reversal. The bears would be happy again should the market break below that 1.1390 level again. So far this week, they have just about managed to defend the 1.1440 resistance level. But a potential break through this area could pave the way for a more meaningful rally later on in the week.
Source: TradingView and FOREX.com
