- The euro shows a soft, range-bound tone ahead of Wednesday’s FOMC decision, with traders focused on whether the Fed signals a hawkish or dovish stance.
- Major levels remain intact, keeping the pair neutral until headline risk clears.
The euro initially rallied during the trading session on Monday. It looks pretty soft at the moment. Not a huge surprise, really, because ultimately this is a market that is somewhat neutral as we wait for the press conference after the FOMC meeting. Keep in mind that the Federal Reserve is expected to cut rates, but the real question is going to be whether or not we see more of a hawkish or a dovish tone in the press conference.
That being said, if the Federal Reserve for some reason did not cut rates, this pair will crater. Ultimately, we are in a wait-and-see pattern as we're sitting just above the 50-day EMA. So, I'm not looking for major moves, but I do recognize that there is a larger range between 1.18 and 1.14 that we are trading in.
Top Forex Brokers
Key Technical Levels in Focus
If we break down below the 1.16 level, then I think we might make a move towards the 1.15 level. But between now and late Wednesday, I'm not looking for anything bigger than that. If we were to break above the 1.18 level, probably after Wednesday, then we have a lot of momentum coming into the market, and we will probably go much higher. Ultimately, this is a market that I'm fairly neutral on in the short term. Longer term, I still believe in the downside.
But of course, that can change if we do, in fact, see a complete 180 by the Federal Reserve. The ECB is not expected to cut rates and is expected to hold still. But the US economy should outperform early next year in comparison to the Europeans. So, I think it's probably only a matter of time before gravity comes in and knocks this thing down. But again, we have that major headline risk on Wednesday. And I think a lot of people are hesitant to put money into the market between now and then.
Ready to trade our Forex daily forecast? We’ve shortlisted the top forex brokers in the industry for you.