The EUR/USD currency pair, on fire right now! The dollar index has recorded gains for the third consecutive day, on its way back towards the 1.1370 area. The pair is rapidly gaining bullish momentum as it nears multi-day tops. This increase is indicative of robust market optimism for the Euro against the US Dollar. Recent movements come as the Greenback is under heavy selling pressure. This is no coincidence, as the FOMC meets on Wednesday.
The biggest potential market mover remains the forthcoming appearance by Federal Reserve Chair Jerome Powell. At the same time, the EUR/USD currency pair is looking for its next move. Currently, the Bloomberg consensus forecast is for EUR/USD to remain range bound around 1.1300. In fact, this expectation continues to persist as we head into the FOMC meeting. This is representative of the generally cautious, risk-averse sentiment among traders as they await clear signals about the path forward for monetary policy.
The AUD/USD pair has turned optimistic on Tuesday. It’s pushing up near a big psychological resistance line at 0.6500. It retraced a little to just below 0.6450. This decline occurred against the backdrop of China’s Purchasing Managers’ Index (PMI) slowing, sparking concerns about economic growth in the region. If AUD/USD is to make a break higher, it will need to first overcome the 0.6500 resistance area.
The US Dollar continues to trade broadly lower, showing signs of market fear and trepidation going into the FOMC meeting. As traders assess the implications of potential interest rate changes and economic indicators, further selling pressure on the Dollar is likely to continue.