The EURUSD has moved back to the downside ahead of the FOMC decision later today. The Fed and chair Powell has a lot on the table with taper, rate trajectory and balance sheet all in play. With this being the last meeting until March where the market is targeting the liftoff in rates, some transparency from the Fed chair will be eyed. Will Powell deliver? You can be sure that he has played the comments in his mind ahead of this key meeting and presser.
Looking at the EURUSD, the USD is higher ahead of the decision. Technicals are in play as the pair has (apart from brief looks) stayed below the 100 hour MA which the market tends to follow and use as a risk/bias defining tool (see blue line in the chart above) Stay below is more bearish, move above is more bullish.
Since January 17, the price has stayed below that moving average apart from two modest hourly bars (on Friday of last week and again on Monday).
In trading today, the price high reached 1.13101. That was well below the moving average at the time near 1.1321 (see blue line - the moving average is currently at 1.13142).
The subsequent move to the downside today has so far stalled near a swing area between 1.1271 and 1.1276. Those levels were swing lows going back to December 29, January 4 and January 5. In trading yesterday, the price did move below those levels to test another swing area (lows from December 21 and December 22) between 1.1260 and 1.12636. Both those of swing areas are in play through the FOMC decision. Move below would be more bearish.
Recall, the price action from November 26 until January 12 stayed within a relatively narrow range between 1.12208 and 1.13857 (about a 165 pips). On January 12, the price extended above the 1.1357 and spent the next two days running up to 1.1482. However, on January 18, the price moved back below that old ceiling and has been continuing to step down since then. The highs from last Thursday, Friday, Monday, Tuesday and again today, have been progressively lower (and below that falling 100 hour moving average). That gives the pair a more negative/bearish bias going into the FOMC decision from this point in time.
It would take a move back above the 100 hour moving average to give the buyers more hope (there would be more work to be done like getting above the 200 hour moving average at 1.13474 to increase the buyers confidence). Until then, however, the sellers are in firm control.
On the downside the aforementioned swing areas will be targeted through the FOMC decision. Move below the 1.12601 level and traders will start to target a lower swing area between 1.1220 and 1.12331. There are a number of swing lows within that range going back to November 26 (some not seen in the chart).
The cycle low from November reached 1.11853. That was lowest level since July 1, 2020. Move below it, and the bearish bias intensifies.
