EUR/USD Closes Three White Soldier at 1.1745: FOMC in Highlights
- The EUR/USD has closed the “Three White Soldiers” pattern above the 1.1705 level.
- The EUR/USD is trading with a bullish bias at the 1.1743 level ahead of the FOMC tomorrow.
- Forex trading market participants may look for a buy trade above $1.1725 with an initial target of $1.1752 and a 1.1780 level.
After trading as low as 1.1699, a new September low, the EUR/USD pair ended Monday with minor losses around the 1.1720 price range. In a risk-averse atmosphere, market participants rushed into the greenback as they were concerned about a likely slowdown in China’s economic growth, which could hinder progress in other major economies. The EUR/USD price forecast remains bullish as the US FOMC remains in highlights.
If you are interested in trading EUR/USD with forex robots, check out our guide.
Weaker Dollar Continues to Support EUR/USD
The dollar slipped from a month high in early European trade Tuesday, ahead of the commencement of this week’s critical Federal Reserve meeting. At the same time, the yuan remained under pressure due to China’s Evergrande Group’s debt difficulties. The Dollar Index, which tracks the dollar against a basket of six other currencies, was 0.1 percent lower at 93.130 at 2:55 a.m. ET (0755 GMT), after climbing to a high of 93.455 for the first time since August 23.
The USD/JPY increased by 0.2 percent to 109.57, the EUR/USD increased by 0.1 percent to 1.1736, the GBP/USD rose by 0.2 percent to 1.3680, and the risky AUD/USD by 0.4 percent to 0.7277, reversing a three-week low. Trading ranges are likely to be limited ahead of the Fed’s two-day policy meeting, which begins later Tuesday, amid hopes that the central bank would reveal more details about when it will begin its asset cutting. “We believe there will be some recognition that the current level of monetary accommodation may no longer be necessary by year-end and that asset purchases may begin to be unwound,” ING analysts wrote in a note.
FOMC Preview And Dollar Outlook
The Fed will also release its quarterly economic projections, which will include, for the first time, figures for 2024. Furthermore, most traders and economists predict that the median “dot” for interest rate liftoff from near-zero percent rates will remain in 2023. At the same time, it would only take a couple more hawkish members to shift the median “dot” to next year.
Besides, the Fed will also update how it perceives economic growth, unemployment, and inflation developing over the next few years. Given the Fed’s track record of poor economic forecasting, any changes to those forecasts will undoubtedly be scrutinized for clues about which way the monetary policy winds are blowing.
The dollar held steady at 93.190 against a basket of competitor currencies after hitting its highest level since August 23 at 93.45 in the previous session. Equities futures in the United States were up 1%. Investors were cautious as markets recovered from Monday’s selloff. A currency market volatility index hit new highs for the first time since late July.
Quick Update on Economic Data
On the data front, at 13:00 GMT, the Current Account Balance from July dropped to 21.6B against the predicted 22.3B. It weighed on the single currency Euro and added in the loss of EUR/USD. At 14:00 GMT, the Final CPI for the year remained flat with the expectations of 3.0%. The Final Core CPI also came in line with the forecasts of 1.6%.
From the US side, at 01:00 GMT, the TIC Long-Term Purchases in July declined to 2.0B against the anticipated 60.5B and weighed on the US Dollar that further caped loss in EUR/USD. At 19:00 GMT, the Prelim UoM Consumer Sentiment fell to 71.0 against the anticipated 71.9and weighed on the US dollar, limiting the decline in EUR/USD. The Prelim UoM Inflation Expectation for September rose to 4.7% against the previous 4.6%.
EUR/USD Price Forecast – Daily Technical Levels
Pivot Point: 1.1729
EUR/USD Price Forecast – FOMC in Highlights
The EUR/USD is trading with a bullish bias at 1.1743 level ahead of the FOMC tomorrow. In the 4-hours timeframe, the EUR/USD currency has extended the downward channel, and now it’s providing support at the 1.1705 level. A bearish breakout below this level can extend the selling trend until the 1.1664 level.
The double bottom pattern provides immediate support at the 1.1664 level. On the flip side, the EUR/USD has closed the “Three White Soldiers” pattern above the 1.1705 level. This pattern supports a bullish trend in the EUR/USD pair.
On the further higher side, the EUR/USD’s next resistance stays at the 1.1750 level. It’s the same level that worked as a support for the EUR/USD pair, and now it’s working as a resistance. Furthermore, this level is also being extended by a 50 days EMA. Closing of candles above this level can extend buying trend until the 1.1799 level.
On the other hand, the leading technical indicator, stochastic RSI, is holding in a buying zone. It’s demonstrating a bullish trend in the EUR/USD currency pair. Therefore, Forex trading market participants may look for a buy trade above $1.1725 with an initial target of $1.1752 and 1.1780 level. Alternatively, sell trades can be taken below the $1.1799 level to target $1.1705. All the best!
Looking to trade forex now? Invest at eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.