EUR/USD sticks to gains above 1.2000, Fed decision eyed

The EUR/USD pair extends its upward trajectory into a fifth day today, as the bulls continue to cheer improved Eurozone economic outlook. However, further upside appears to lack follow-through, leaving the pair in a consolidative mode near 1.2010 levels over the last hours

EUR/USD: All eyes on Fed

Having found strong support just below 1.20 handle on several occasions, the spot managed to regain the last amid persistent broad based US dollar weakness, as we head towards the key FOMC policy decision.

The weakness seen behind the US dollar is mainly in response to markets having already priced-in a Dec Fed rate hike and a QE run-off beginning October, which also reflected by weaker Treasury yields across the curve.

Meanwhile, the sentiment around the Euro remains underpinned, in the wake of yesterday’s solid improvement seen in the German ZEW economic sentiment. Further, the US President Trump’s speech at the UN on North Korea had little impact on the USD, keeping the main currency pair gravitating around 1.20 handle.

Later today, the US existing home sales data will offer some incentives for the pair, while the FOMC decision will shape up the next direction in the US dollar against its main competitors, having a major impact on the EUR/USD pair.

EUR/USD Technical Set-up  

Valeria Bednarik, Chief Analyst at FXStreet notes: “The pair has an immediate resistance in the 1.2030/60 region, with gains beyond the level exposing firstly the 1.2101 level, January 2015 high. Beyond it, the rally can extend short term towards 1.2140/60, while a daily close above 1.2100 will open doors for an extension towards 1.2300 in the following days”.

“1.1910 is the immediate support, ahead of the critical 1.1820, where the pair has the mentioned trend line and a relevant weekly low from August. Further slides below this level will leave the pair poised for a deeper downward corrective movement, down to August 17th low at 1.1661,” Valeria adds.