Euro (EUR) extended downside movement against the US Dollar (USD) on Wednesday, dragging EURUSD to less than 1.1220 ahead of the Federal Reserve’s crucial interest rate decision. The technical bias remains bearish because of a Lower Low in the recent upside rally.
As of this writing, the pair is being traded near 1.1203. A support may be noted around 1.1188, the low of yesterday ahead of 1.1100, which is the confluence of a psychological number as well as the swing low of the latest major downside move as demonstrated in the following daily chart.
On the upside, the pair is likely to face a hurdle near 1.1214, the horizontal resistance level ahead of 1.1338 and 1.1413 that are also crucial horizontal resistance levels as highlighted in the above chart. The technical bias will remain bearish as long as the 1.1410 resistance area is intact.
Fed Monetary Policy
With the Federal Reserve considered sure to leave interest rates alone when it ends the meeting Wednesday, the Fed watchers will be seeking clues to the timing of the future moves. The central bank will release a policy statement and update its forecasts for the economy and interest rates. Afterward, Chair Janet Yellen will hold a news conference.
For weeks, the Fed had been expected to consider raising rates at its June meeting. That view was encouraged by the minutes of its most recent meeting in April. The minutes suggested that a rate hike was likely if hiring and economic growth strengthened and inflation showed the signs of accelerating toward the Fed’s 2 percent target rate. But this month, the government caught the financial world off guard when it said employers added just 38,000 jobs in May – the weakest gain in five years – and that job growth averaged only 116,000 for the past three months, down from 230,000 for 12 months ending in April.
Considering the overall technical and fundamental outlook, selling the pair on short-term rallies appears to be a good strategy.