Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
The EURUSD pair showed some resilience and recouped some of the losses in the Wednesday trading session following a minor setback, declining by 0.12% on Tuesday, closing at $1.0679.
However, as traders await the Federal Reserve’s interest rate decision, the market outlook remains uncertain. The Federal Reserve’s interest rate decision, along with Fed Chair Powell’s statements, takes centre stage. The Federal Reserve is expected to maintain its current interest rates, holding them steady at 5.25%-5.50%. Nonetheless, market attention will be firmly fixed on the central bank’s forward guidance. A more optimistic outlook for GDP, unemployment, and inflation may signal a potential November Fed rate hike, impacting the dollar’s strength.
Meanwhile, the recent hawkish commentary from the ECB added to the ambiguity surrounding monetary policy. ECB Executive Board members are scheduled to speak, and their remarks may influence the EURUSD trajectory. Hawkish comments could bolster expectations of further ECB interest rate hikes to combat inflation.
On the 4-hour chart, the EURUSD currency pair is currently trading at 1.06940, perched comfortably above the daily pivot point. The price movement conforms to an ascending channel trading pattern, reflecting a steady bullish trend.
The 20-EMA (orange line) provides immediate support, while the 50-EMA (blue line) and the 100-EMA (red line) create resistance overhead. Notably, the 100-EMA is trading above both the 50-EMA and 20-EMA, indicating sustained bullish sentiment. The Relative Strength Index (RSI) stands at 52.00, and the RSI-based Moving Average is at 47.45, underscoring growing bullish momentum.
Therefore, short-term trading opportunities could exist towards the 1.07177 resistance level should the upward trajectory be sustained. A successful breach of this level may pave the way for further gains, targeting the 1.07523 resistance level.
In case of a reversal, traders should monitor the daily pivot point and the channel’s lower boundary. A push below these levels may present short-term trading opportunities towards the initial support at 1.06309, with further downside potential towards the 1.05971 support level.
As the market awaits the Fed’s decision, the EURUSD currency pair is likely to remain volatile in the Wednesday session. The Fed is widely expected to keep rates unchanged, but the focus will be on its forward guidance and economic projections.
On the one hand, a more hawkish Fed stance could boost the US dollar and weigh on the euro, likely bringing the 1.06309 support level into play. On the other hand, a dovish Fed could lead to a weaker dollar and support the euro, likely leaving the 1.07177 resistance level within reach in the short term.
Quellen: TradingView, Trading Economics, Reuters, Dow Jones Newswire, MT Newswire.