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Technical Outlook: EURUSD Is Holding In Tight Range Around 1.2000 Ahead Of Fed’s Verdict

The Euro remains supported and hit new recovery high at 1.2019 in early Wednesday’s trading, in extension of past four days recovery rally from 1.1737 low.

Tuesday’s eventual close above daily Tenkan-sen line (1.1964) was a bullish signal as bulls look for close above another pivot at 1.1994 (Fibo 61.8% of 1.2092/1.1737 pullback) for confirmation.

Bullish daily techs are supportive for further advance with sustained break above 1.2000 barrier to open way towards recent peak at 1.2092, as there are no further obstacles en-route.

Rising 10SMA and broken daily Tenkan-sen offer solid supports at 1.1967/64, followed by ascending 20SMA at 1.1936.

On the other side, slow stochastic is entering overbought territory on daily chart and signals corrective easing in the near term.

Today’s focus in on Fed, as two-day policy meeting ends today and the US central bank is expected to give more clues about the possibility of another rate hike this year, which is widely expected in December.

The Fed is facing difficult decision on whether to raise interest rates for the third time this year or to stay on hold until inflation improves. Stubbornly low inflation makes the big obstacle for the policymakers, as the Fed is caught between low inflation and strong signals of improvement in global economy.

Along with interest rate hike signals, markets also expect Fed to signal the beginning of reduction of its massive $4.2 trillion holding in bonds and mortgage-backed securities, which were accumulated in response to global crisis and recession.

The dollar is expected to receive significant boost if Fed provides stronger signals about interest rates and balance sheet reduction, which could send the single currency significantly lower, while opposite scenario on dovish signals from Fed would inflate the Euro for rally towards next target at 1.2166.

Quiet trading is seen likely on Wednesday ahead of Fed’s announcement, due at 18:00 GMT.

Res: 1.2096, 1.2032, 1.2070, 1.2092
Sup: 1.1964, 1.1935, 1.1900, 1.1877

Windsor Brokers Ltd
Windsor Brokers Ltdhttp://www.windsorbrokers.com/
The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.

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