EUR/USD Forecast – Euro Continues to Look to The Fed

Euro vs US Dollar Technical Analysis

The Euro has gone back and forth during the course of the trading session on Wednesday as we continue to see a lot of noisy behavior. The FOMC interest rate decision, statement and press conference all are coming later in the session and that obviously will have a major influence on what happens with the US dollar.

The 1.11 level underneath is significant support just as the 1.1150 level is significant resistance and between now and that decision, we will probably see the market bang around in this area. It’s really not a question of whether or not the Federal Reserve will cut rates, it’s more or less a decision on how aggressive they’re going to be and how people interpret the statement as well as the press conference.

There is about a 50-50 shot that the interest rates are cut by 50 basis points according to Fed funds futures traders. But really at this point, I think that’s a bridge too far. After all, we still have inflation in the United States that higher liquidity would only make worse so I do think that the Federal Reserve has to walk a bit of a tight rope here and therefore I would expect a lot of noise.

If the euro can break well above the 1.12 level, then I think it will be free to go much higher over a longer term period. The market breaking down from here probably opens up the 1.10 level where I would expect to see a lot of support.

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