The EURUSD is technically positive, but the Fed is a roadblock.
On Wednesday, the EURUSD reclaimed the 1.1000 level and reached an intraday high of 1.1046 before entering consolidation mode. In the middle of the European morning as investors anticipate the United States Federal Reserve (Fed) monetary policy announcement.
The Fed is largely expected to raise rates by 25 basis points (bps) and signal the conclusion of the monetary tightening cycle. However, it appears likely that Chairman Jerome Powell and his colleagues will leave the door open for further tightening. If inflation remains stubbornly high.
Investors are awaiting the Federal Reserve of the United States’ monetary policy announcement.
The Fed’s decision has long been priced in, so the market will wait for Powell. While the likelihood of a surprise 50 basis point hike or an on-hold stance is low. It would cause a wild market reaction. Whatever Chief Powell predicts for the future of monetary policy. Will be the catalyst that the market has been looking for.
Another important consideration is the state of the banking system. A third US bank failed between the previous Fed meeting and this one. And regional bank shares are under heavy selling pressure ahead of the statement. European indices remain afloat. Trading with slight advances ahead of Wall Street’s opening. Their US counterparts, on the other hand, are trading near Tuesday’s close.
In terms of data, the Eurozone (EU) announced the March Unemployment Rate, which fell to 6.5% from 6.6% the previous month, exceeding forecasts. In the United States, the ADP survey on Employment Change reported a staggering 296K, more than twice the 148K expected by financial markets. Following that, S&P Global will release the final estimate of the Services and Composite PMIs will be released, while the official ISM Services PMI for April is predicted to be 51.8, up from 51.2 in March.
EURUSD Technical Outlook
After the release of the ADP survey, the EURUSD pair fell slightly. But quickly recovered and is now trading around 1.1040.
Technically, the pair remains above a modestly bullish 20 Simple Moving Average (SMA). Which moves above the lengthier ones and provides dynamic support at approximately 1.0980 on the daily chart.
Simultaneously, the Momentum indicator remains flat at around 100, while the Relative Strength Index (RSI) has picked up steam, aiming north at around 58. Overall, the risk is skewed to the upside, however the Fed’s decision will determine the direction of change.
The EURUSD is comfortably above its moving averages on the 4-hour chart, with the 20 SMA lacking direction but the longer-term moving averages showing strength. ones keeping their rising slopes.
Meanwhile, technical indicators are consolidating well above their midpoints and at new weekly highs, favoring a bullish continuation but not confirming it.
