The EUR/USD pair continues to wait for the Fed meeting results and the ECB announcement. At this point, this is a situation that could make this pair a bit noisy and choppy.
EUR/USD
The euro rallied slightly during the trading session here on Wednesday ahead of the FOMC. Despite the fact that rates have rallied a little bit, we are waiting for the Federal Reserve decision, and I suspect at this point you’re probably seeing a little bit of short covering. And why not? We’ve seen such a nice run to the downside over the last couple of days. I think it makes a certain amount of sense that sellers take some profit.
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That being said, not much has changed here for me other than I’ll be waiting for the statement and the potential decision. I don’t think the decision is going to be much. Most traders believe that December is still a very live contract month in the futures market, as well as for interest rate decisions.
I like the idea of fading short-term spikes.
Ultimately, I believe that the euro probably still faces quite a few problems. The first of which, of course, would not only be a hawkish Fed and inflation in America, but you also have to worry about energy and whether or not it’s going to make it to the European Union, French debt, etc. It’s all the same story it’s been for a while.
Because of this, I like the idea of fading short-term spikes. This would be especially true near the 1.1250 level, although I don’t know that we’ll get that far. But a failure to clear the 1.12 level would also be a selling opportunity from everything I see.
Unless the Federal Reserve completely goes dovish this afternoon, I just don’t see how the euro recovers completely. That being said, keep in mind that we do have an ECB meeting and announcement in the morning. So the moves that you make in this pair will probably have to be pretty quick.
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