The pre-FOMC selling has the EURUSD moving higher (that and the extension of what was a very narrow trading range). The price of the pair has moved up to the topside trend line at the 1.2770 level. This trend line was broken in trading yesterday as the buyers scrambled after the weaker US data. However, the moves (momentum) were reversed and the price settled back in the channel – but above the 200 hour MA (green line).
EURUSD tests the topside trend line. Yesterday on the economic data the move above failed.
Today, the low for the day got close again to the 200 hour MA (green line at the 1.27165 level vs the low at 1.2722) and the price once again rebounded off that key MA level (currently at 1.2714). That 200 hour MA is a level to remember after the FOMC decision.
A move to the level on a more hawkish Fed, should find support while a move below should solicit stops. Be aware. Much will depend on the tone and the markets interpretation of course. We won’t know that until shortly after 2 PM. PS. the 200 hour MA and lower trend line are lining up at the same level increasing the levels importance (see chart above).
Closer to the current price, the pair is also above the 1.2746-57 area now.These two levels represent the lows from 2013 (see daily chart below). The high prior to the last surge higher was respecting the 1.2746 level (see hourly chart above). The move above the 1.2746 level, solicited more buying.
On a move below the 1.2746 level (after the FOMC) it will likely switch the bias around from bullish to bearish for traders (i.e. they should re-start using the two prices as resistance instead of support).
Should the statement continue to support a higher EURUSD (lower dollar), the 1.2780-83 will be the closest target to surpass (highs from October 21 intraday -see hourly chart). A move above that will look toward another test of the 1.2838-43 area where there a series of highs (see hourly chart). This should be a tough nut to crack though. I would expect sellers lining up.
FYI. The average trading range for the EURUSD is 114 pips. A move to 1.2838 would be 115 pips. A move lower (assuming the high is in place) would target 1.2654 area. That is not to say that those levels will be reached (I would put it at 20% today), but it is a level that if the statement supports a more bullish or bearish dollar, we could target.
The lows from 2013 were at 1.2746 and 1.2757. The current price is now above this level.
