- The euro is slightly up against the US dollar, but is encountering resistance near the 50-day EMA as a significant central bank event approaches.
- Key focus points are at 1.17 and 1.1550, with expectations for volatility throughout the week.
On Tuesday, the euro showed a slight uptick against the US dollar, yet it’s hitting resistance at the 50-day EMA. This setup could lead to some turbulence as we approach Wednesday’s FOMC meeting and press conference, followed by Thursday’s European Central Bank interest rate decision.
Expect some erratic movement
In simpler terms, we can predict a lot of erratic activity, confusion, and interruptions. Ultimately, we’ll have to wait and see how things pan out, with Friday possibly being the first calm day post-central bank announcements. Currently, there’s quite a bit of resistance, particularly near the 1.17 level.
The 1.17 mark has been significant for a while now, supported by the 1.18 level. What happens around here will be intriguing and quite favorable for the euro. However, it’s crucial to note that for the moment, we’re kind of stuck in this consolidation phase. Following the FOMC announcement, the US dollar continued to strengthen relative to the euro.
If we breach the 1.1550 level, it could trigger a drop in the USD to around 1.14, where the 200-day EMA is located. This might establish a critical lower limit, as going below that would signal a potential downtrend. At that juncture, I think we might see the US dollar strengthen against several currencies, not just the euro.
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A trader with over 20 years of experience in foreign exchange, Christopher Lewis has been a regular contributor to the Daily Forex site. He writes for various online platforms about forex and enjoys using technical analysis to identify trades. His trading style is typically long-term, with trades often spanning days or weeks.
