The EUR/USD currency pair has come under a heavy cloud of stagnation, trading no higher or lower—essentially sideways—for the fourth day in a row. Market participants have their eyes set in the widespread coming monetary policy announcement from the United States Federal Reserve. This announcement will likely determine the direction for the currency pair this week. At the time of writing, EUR/USD is trading around 1.1360. Most investors are betting the Federal Reserve will hold interest rates steady in a range between 4.25% and 4.5%.
Recent political, economic, and monetary developments provided further wind in the sails of the US Dollar. Positive headlines implying a thawing of trade relations between the US and China have offered some short-term relief. As both countries prepare to meet for negotiations to defuse their long-simmering trade conflicts, this unexpected piece of good news has firmed up confidence in the USD. That said, it stands pat as the markets wait for greater direction from the Federal Reserve.
Here’s what our daily EUR/USD chart is telling us. This puts us at a neutral-to-bullish short-term bias. Additionally, the currency pair trades above a bullish 20 Simple Moving Average (SMA). This SMA rests well above the mildly bullish 100 and 200 SMAs. While admittedly a niche technical positioning, it does imply a somewhat bullish outlook for the Euro vs. USD if upward momentum can be established.
Support levels are seen at EUR/USD 1.1275, 1.1230 and 1.1190. On the flip side, resistance is seen at 1.1370, 1.1410, and 1.1465. These levels will be critical in determining the pair’s trajectory following the Federal Reserve’s announcement.
The Momentum indicator for EUR/USD remains flat close to the 100 line. To us, that indicates there has been no clear directional trend over the past few days. The Relative Strength Index, or RSI, is currently around 59— still not overbought. That would mean the market is approaching overbought territory, although it still hasn’t technically broke out.
Investor focus is squarely on Federal Reserve Chairman Jerome Powell’s upcoming speech, where he is expected to provide insights into policymakers’ perspectives on interest rates and economic conditions. Any shifts in tone or guidance from Powell could significantly impact market sentiment and influence the direction of EUR/USD.