Large expiries between 1.1190 and 1.1210 likely to keep the price action in EUR/USD muted before the FOMC meeting
It's all about the Fed today as major currencies are little changed on the day with EUR/USD pretty much at flat levels currently. Besides the FOMC meeting later, price action has to contend with €5.2 billion worth of option expiries mired between 1.1190-10 and that is likely to keep the pair anchored unless there is some major headline to shake things up.
The near-term bias continues to suggest that sellers are favoured as price sits below both key hourly moving averages but a more dovish Fed could help buyers build some near-term gains towards a test of said key levels.
The real issue with a dovish Fed today will rest more along the lines of how dovish are they actually going to be?
Markets have already priced in a ~82% probability of a 25 bps rate cut in July so that's not a whole lot of room for the dollar to weaken if it is a mere one and done (pause) as they continue to keep an eye on global trade developments.
The most dovish reaction will be markets starting to believe that this is the start of an easing cycle by the Fed. Unless that happens (whereby they'll price in further rate cuts beyond July more heavily), I reckon any dollar weakness may not persist for too long.
