The EUR/USD currency pair is currently facing a real conundrum. It’s stuck between a climbing 20 Simple Moving Average (SMA) and a horizontal 100 SMA. As traders await the upcoming Federal Reserve announcement, the pair’s movement remains tightly bound within critical levels that could define its trajectory.
Currently, the 20 SMA for EUR/USD is at 1.1641, acting as first resistance. On the other hand, the 100 SMA is located a bit lower at 1.1625, representing the first line of support in this scenario. Traders are on edge as they keep a close watch on all the leading indicators. They are especially bracing for the market volatility that often accompanies major policy announcements, like the one expected from the Federal Reserve.
A much wider market background tells an unmistakable tale. Furthermore, both the 100 and 200 SMAs for EUR/USD are consistently moving lower. The 200 SMA is currently at 1.1688, providing dynamic support. Nonetheless, it does raise a bearish flag, strengthening the downside pressure on the pair. The 25 basis point reduction to the benchmark interest rate has been a foregone conclusion. This new approach to US monetary policy could have strong consequences for the euro’s strength against the dollar.
New technical signals to paint a very worrisome picture of momentum shift in EUR/USD. The short-term 20 SMA has crossed to the downside and is currently bearish. During the same time, the momentum indicators have slipped back below zero. In fact, the Relative Strength Index (RSI) for EUR/USD just fell below the important 50 mid-line. It currently sits at 46.9. This technical development is a sign that the selling pressure is gaining momentum, making the outlook for the currency pair murkier.
Immediate resistance for EUR/USD is quite clearly pinned down the 1.1641 floor. This resistance lines up perfectly with where the 20 SMA is positioned right now. A sustained move above this level will give a bit of upside pressure to relieve intraday. Such a move would lay the groundwork for a resistance band between 1.1641 and 1.1666. If EUR/USD is unable to hold above this key region, the pair may be poised for further downside. This time, watch closely as it approaches its first major support level at 1.1625.
The market’s subdued tone symbolizes a time of uncertainty as traders begin to assess possible scenarios resulting from the Federal Reserve’s conference. Should the Fed signal a more hawkish stance or provide insights that deviate from market expectations, significant volatility may ensue for EUR/USD.