CFD Trading Rate Euro vs US Dollar (EURUSD)

• EUR/USD gains ground around 1.0816 on the softer USD. 
• FOMC’s Chair Powell said the recent elevated CPI inflation data hadn’t changed the overall view that inflation is trending lower. 
• ECB’s Scicluna said the rate cut as soon as April could be warranted and shouldn’t be ruled out.
• Investors will focus on the Chicago Fed National Activity Index, US New Home Sales, and the Fed's Bostic speech on Monday. 

The EUR/USD pair kicks off the new week on a positive note above the 1.0800 mark amid the softer US Dollar (USD). The highlights for this week will be the release of German February Retail Sales and US Gross Domestic Product (GDP) growth numbers for the fourth quarter (Q4). At the press time, EUR/USD is trading at 1.0816, adding 0.08% on the day.  

The Federal Open Market Committee (FOMC) held rates steady at 5.25–5.50% for a fifth consecutive meeting last week. The FOMC’s Chair Powell said the recent elevated CPI inflation data hadn’t changed the view that inflation is trending lower while adding that the central bank would be prepared to cut rates if labour market conditions deteriorated unexpectedly. The FOMC maintained its outlook for median dot for 2024 at 4.625% and signaled three quarter-point rate cuts this year. Any dovish comments from Fed officials weigh on the US Dollar (USD) and cap the downside of the EUR/USD pair. 

Across the pond, European Central Bank (ECB) Governing Council member Edward Scicluna stated that the interest-rate cut from the ECB as soon as April could be warranted and shouldn’t be ruled out. Meanwhile, Bundesbank President Joachim Nagel said on Friday that the ECB may be in a position to cut interest rates before the summer, possibly in June, as inflation is on the way back to the 2% target.

Financial markets anticipate 89 basis points (bps) of rate cuts or at least three but possibly four 25 bps moves, with the first coming in June or July. Additionally, the growing speculation that the ECB will be the second major central bank to cut rates after the Swiss National Bank (SNB) cut rates in a surprise move last week weighs on the Euro (EUR) against the Greenback

Moving on, the Chicago Fed National Activity Index and US New Home Sales for February will be due on Monday, along with the Fed's Bostic speech. On Thursday, the German Retail Sales and US GDP Annualized growth numbers for Q4 will be released. The US economy is forecast to expand 3.4%. 

• Euro sheds 1.3% top-to-bottom in broad-market pullback into USD.
• Upbeat German data couldn’t keep the Euro afloat.
• US GDP and PCE inflation to be key data prints next week.

The EUR/USD lost further ground on Friday, as investors shrugged off above-forecast German economic data to bid up the US Dollar across the board. Mid-tier German sentiment indicators all came in well above expectations as consumer, investor, and business sentiment all improve. However, middling to soft economic data from Europe remains a key stumbling block for overly bullish confidence.

Federal Reserve (Fed) Chairman Jerome Powell delivered a speech while attending a Fed Listens event in Washington, DC. Still, the Fed head was careful to avoid discussing any monetary policy issues, leaving rate-cut-hungry investors with little new to chew on heading into the weekend.

Next week, US Gross Domestic Product (GDP) figures on Thursday and a Personal Consumption Expenditure (PCE) Price Index print slated for Friday will dominate market focus. Market participants hoping for Fed rate cuts sooner rather than later will be hoping for US growth to continue easing. The Core MoM PCE Price Index, the Fed’s favored inflation metric, is expected to tick down to 0.3% from 0.4%.

EUR/USD technical outlook

EUR/USD rose into a weekly high of 1.09426 on Thursday, before extending a backslide into the 1.0800 handle ahead of the Friday market close. The pair shed nearly 1.3% top-to-bottom, stumbling into the Euro’s lowest bids since the beginning of March.

Daily candlesticks have fallen back into the 200-day Exponential Moving Average (EMA) near 1.0820, and the way is open for a continued slide into the last swing low near 1.0750.

EUR/USD hourly chart

EUR/USD daily chart

• EUR/USD is testing the key 200-day SMA on Friday after recapitulating over the prior sessions. 
• The pair is poised to break below key support levels as key central bank figures line up to speak. 
• Their commentary could impact expectations of when future interest rate cuts may take place.

EUR/USD is trading a quarter of a percent down on Friday, in the lower 1.0800s just below the 200-day Simple Moving Average (SMA). The pair has seen increased volatility since the Federal Reserve (Fed) policy meeting on Wednesday. The release of Eurozone and US flash PMI data for March on Thursday caused further volatility after the data showed the US economy in better shape than that of the euro area. 

As traders wrap up for the weekend there is a heightened possibility of further moves as a roll call of central bank speakers take to the pulpit to share their views on Friday – from both the European Central Bank (ECB) and the Fed. 

EUR/USD: A day of doves and hawks

EUR/USD exchanges hands in the 1.0830s as the European session on Friday gets underway. Key drivers for the pair at the end of the week will probably be commentary from central bankers. Several key figures are set to speak on monetary policy topics, including Bundesbank’s President Joachim Nagel, Fed’s Chairman Jerome Powell and ECB chief economist Philip Lane. 

Their comments could impact the outlook for interest rates, which are set by central banks. Interest rates impact currencies because they dictate the level of foreign capital inflows from investors searching for returns. When interest rates are expected to go up it is positive for a currency; when down negative. Currently, the debate hinges around the timing of future rate cuts, with the consensus being that both the ECB and the Fed will make cuts in June. Anything that deviates from that view could cause volatility.  

The first key central banker in the line up is the President of the Bundesbank, Joachim Nagel at 9:00 GMT who will be participating “in a webcast on monetary policy challenges and the economic outlook for the Eurozone and Germany,” according to the economic calendar. 

His most recent comments suggested he is concerned about “Europe’s growth prospects more than his homeland” and back in February, he said the governing council should wait for Q2 wage data before deciding on whether to cut interest rates or not, suggesting he foresees June as a potential date for a rate-hike. 

At 13:00 GMT, Federal Reserve Chairman Jerome Powell will participate in a “Fed Listens” panel about current economic conditions and how Covid impacted the economy. Vice-Chair Philip Jeffereson and Governor Michelle Bowman will also be at the event. 

At 16:00 GMT, Federal Reserve Vice-Chair for Supervision Michael Barr will participate in a virtual discussion titled "International Economic and Monetary Design".

At 17:00 GMT , ECB Chief Economist and Board Member Philip Lane will deliver a policy lecture on inflation and monetary policy at the Aix-Marseille School of Economics (AMSE). 

At 20:00 GMT, Federal Reserve Bank of Atlanta President Raphael Bostic will moderate a conversation about household finances at the 2024 Household Finance Conference – there is an outside chance he could mention interest rates. 

Technical Analysis: EUR/USD tests trendline and 200-day SMA

EUR/USD is making volatile switches inside the 1.0800s and 1.0900s. It is currently trading back down in the 1.0800s just below the 200-day SMA at 1.0839, and a major trendline. 

Euro versus US Dollar: Daily chart

The pair appears to be threatening to break below the trendline which could usher in a more bearish phase. 

Such a move would be likely to tumble to at least 1.0775, the 0.618 Fibonacci extension of the move prior to the breakout lower, a common method of forecasting targets for trendline breaks. 

The move down lacks momentum, however, as evidenced by the Relative Strength Index (RSI) on the 4-hour chart below, which shows RSI failing to reflect price’s current move down to a lower low – a suggestion bearish conviction is lacking. 

Euro versus US Dollar: 4-hour chart

Whilst the lack of momentum does not completely preclude the expectation price will fall further, it brings in a note of caution and suggests bears should be careful not to be caught in what could potentially be a false break.

EUR/USD extends its downside. Economists at ING analyze the pair’s outlook.

Manufacturing concerns deepen

• EUR/USD struggles to sustain above 1.0840 as investors turn risk-averse.
• SNB’s surprise rate cut move has prompted the ECB’s rate cut expectations.
• The major currency pair is on the verge of delivering a Descending Triangle breakdown.

The EUR/USD pair extends its downside to three-day low around 1.0840 in the late Asian session on Friday. The major currency pair is expected to witness as appeal for safe-haven assets improve after the Swiss National Bank (SNB) surprisingly cut interest rates by 25 basis points (bps) to 1.50% on Thursday.

A surprise rate cut by the SNB has prompted hopes that inflation is getting under control and other central banks will follow its footprints. This has underscored the demand of the US Dollar as the Federal Reserve (Fed) has revised higher forecast for the annual core Personal Consumption Expenditure Price Index (PCE) to 2.6% from prior estimates of 2.4% for 2024 in its latest economic projections. The US Dollar Index (DXY) rises to a fresh two-week high around 104.20 and recovers its post-Fed policy losses.

Meanwhile, the Euro come under pressure as market expectations for the European Central Bank (ECB) lowering interest rates in the June meeting have boosted by SNB’s surprise rate cut. The pace at which the Eurozone’s inflation is decelerating is higher than the US economy, strengthening hopes for ECB reducing rates aggressively than the Federal Reserve (Fed).

EUR/USD is on the verge of delivering a breakdown of the Descending Triangle pattern formed on a four-hour timeframe. The asset hovers near the horizontal support of the aforementioned chart pattern plotted from March 5 low at 1.0840 while the downward-sloping border is placed from March 8 high at 1.0981.

The near-term demand is downbeat as it is trading below the 50-period Exponential Moving Average (EMA), which trades around 1.0886.

The 14-period Relative Strength Index (RSI) shifts into the bearish range of 20.00-40.00, which indicates a bearish momentum.

EUR/USD four-hour chart

• EUR/USD hovers around 1.0860 amid the firmer USD in Friday’s early Asian session. 
• The US S&P Global Composite PMI came in at 52.2 in March vs. 52.5 prior.
• The Eurozone HCOB Manufacturing PMI arrived at 45.7 in March vs. 46.5 prior, a three-month low.

The EUR/USD pair retreats to the 1.0860 area during the early Asian trading hours on Friday. The downtick of the major pair is backed by the firmer US Dollar (USD) and higher US Treasury bond yields. Traders await the German IFO Business Climate on Friday ahead of the Fed's Chair Powell. 

The US Fed decided to keep its benchmark overnight borrowing rate in a range between 5.25% and 5.5% on Wednesday. Fed Chairman Jerome Powell did not indicate the timing of rate cuts but he expected to lower the interest rate before the end of this year. According to the CME FedWatch Tool, futures markets have prices in 80% odds that the Fed will start cutting the rate in the June meeting.

About the data, the US S&P Global Composite PMI arrived at 52.2 in March versus 52.5 prior. Additionally, the Manufacturing PMI rose to 52.5 in March from 52.2 in February, above the market expectation of 51.7. The Services PMI dropped to 51.7 in March from the previous reading of 52.3, weaker than the estimation of 52.0.

On the other hand, the HCOB's latest Purchasing Managers Index survey on Thursday revealed that the Eurozone Manufacturing PMI arrived at 45.7 in March versus 46.5 prior, worse than the consensus forecast of 47.0. Meanwhile, the Services PMI figure improved to 51.1 in March from 50.2 in February, beating the estimate of 50.5. The Eurozone PMI Composite rose to 49.9 in March versus 49.7 expected and February’s 46.3 reading. 

Moving on, traders will monitor the German IFO Business Climate, along with the Fed's Chair Powell and Barr speeches on Friday. Next week, German Retail Sales for February and the US Gross Domestic Product (GDP) for the fourth quarter (Q4) will be released. These events could give a clear direction to the EUR/USD pair. 

• The Euro’s Fed-fueled rise against the Greenback proved short-lived.
• Fed tips hat to future rate cuts, US Dollar selloff proves temporary.
• European Manufacturing PMI slips, US Services PMI contracts.

The EUR/USD drove headfirst back into familiar territory on Thursday, wit the pair falling three-quarters of a percent through the day to end near 1.0850. Wednesday’s Fed-fueled rally proved to be a whipsaw rather than a break of character for the markets, and the Fiber is pinned firmly back into familiar near-term consolidation territory. 

The Euro (EUR) quickly backpedaled in early Thursday trading after European Purchasing Managers Index (PMI) figures for the European continent shook investors awake. As the economic powerhouse of the European Union, Germany’s mixed PMI prints splashed cold water on Euro bidders, with the German March Manufacturing PMI sliding to a five-month low of 41.6 as business activity confidence continues to wither. Germany’s Manufacturing component was expected to tick upwards to 43.1 from 42.5, and the downside print drowned out an uptick in Germany’s Services PMI component, which printed above expectations at 49.8, beating the forecast 49.8 and inches closer towards positive 50.0 territory after last month’s 48.3.

The pan-European HCOB Manufacturing PMI was expected to come in at an even 47.0 versus the previous 46.5, but missed expectations to print on the downside at 45.7. 

US data also came in mixed, helping to bolster safe-haven bids into the Greenback. March’s US S&P Global Composite PMI declined slightly to 52.2 from the previous 52.5, with the backslide fueled by a miss for the US Services PMI component. US March Services PMI fell more than expected, printing at 51.7 versus the forecast 52.0 after coming in at 52.3 in February.

The trading week will wrap up on Friday with German IFO Expectations, which are expected to improve slightly to 84.7 from 84.1. On the US side, Friday brings a batch of Federal Reserve (Fed) board member speeches as the black-out period from the latest Fed rate call lifts. Fed Chairman Jerome Powell will be headlining the Fed appearance on Friday, slated to give a speech at 13:00 GMT at a Fed Listens event in Washington, DC.

EUR/USD technical outlook

The EUR/USD fell from the day’s early high of 1.09426, declining eight-tenths of a percent top-to-bottom to touch 1.08546. The pair hit the closing bell on Thursday’s trading window near 1.0857. 

The pair is getting mired in the 200-period Exponential Moving Average (EMA) near 1.0864, and Thursday’s bearish turnaround leaves the EUR/USD at risk of chalking in a lower high on the 4-hour charts.

EUR/USD 15-minute chart

EUR/USD 4-hour chart

EUR/USD dips on soft PMI data. Economists at Scotiabank analyze the pair’s outlook.

Daily and weekly trend momentum signals are bullish

• EUR/USD rallies after a dovish hold by the Fed weakens the US Dollar. 
• The Fed continues to expect to make three 0.25% interest rate cuts in 2024, same as December. 
• Eurozone PMI data to give the latest assessment of the region’s economic well being. 

EUR/USD is trading back up in the 1.0900s on Thursday, after surging higher following the Federal Reserve (Fed) meeting. The US central bank maintained the policy status quo and slightly wrong-footed markets, which had been expecting a more hawkish shift in light of recent warmer-than-expected inflation.  

EUR/USD corrects course after Fed maintains status quo

The Fed left the Fed Funds Rate unchanged at 5.25%-5.50% as widely expected but in its accompanying forecast document, the Summary of Economic Projections (SEP), it continued to foresee rates falling to a median target of 4.6% in 2024, like it did in December. 

This is equivalent to expecting around three 25 bps (0.25%) of rate cuts this year, even though some market participants had speculated it might reduce the number of cuts to two because of stickier-than-expected inflation. 

It did, however, see less rate cuts in 2025, with the Fed Funds Rate falling to a median of only 3.9% rather than the 3.6% in the December SEP. 

The Fed revised up its GDP forecast substantially, to 2.1% for 2024, from 1.4% in December – regarded by many as indicative of a “soft landing”. 

The central bank’s preferred gauge of inflation, the Core Personal Consumption Expenditure (PCE) – Price Index, was revised up to 2.6% for 2024 from 2.4% in December. 

In his press conference after the meeting, Federal Reserve Chairman Jerome Powell sought to play down the latest batch of hot inflation readings, saying only two months of data was not enough to dissuade the Fed from its path. 

The overall interpretation was of a “dovish hold,” which resulted in the US Dollar selling off from overbought territory. The EUR/USD pair, which measures the buying power of a single Euro (EUR) in US Dollars (USD), rallied back up into familiar territory. 

European PMI data ahead

The next key release for the EUR/USD pair is the Eurozone March Purchasing Manager Indices (PMI) from ​​S&P Global and Hamburg Commercial Bank (HCOB), out at 10:00 GMT on Thursday. 

The flash estimate will provide the latest snapshot of economic health in the region. 

HCOB Composite PMI for the Eurozone is expected to show a rise to 49.7 in March from 49.2 in February, the Services PMI is forecast to come out at 50.5 from 50.2, and Manufacturing at 47.0 from 46.5 previously, 

A higher-than-expected result would likely be bullish for EUR/USD and vice versa for a lower-than-expected result. 

Technical Analysis: EUR/USD returns to the 1.0900s

EUR/USD reversed on a dime at around the level of the 200-day Simple Moving Average (SMA) in the 1.0830s and surged higher after the Fed meeting. It is now back up in the 1.0900s and seems to be trading in a range, with no real bias one way or another.

Euro versus US Dollar: 4-hour chart

The reversal at Wednesday’s lows continues to show momentum, however, and if price pushes higher it will probably meet resistance at the 1.0964 March 13 highs. If it breaks above them the March 8 highs for the month come into view at 1.0981. A break above them would turn the outlook bullish again. 

Alternatively, the up move could petter out and price could also fall back down to target the 50-day SMA in the 1.0840s followed by the 200-day again in the 1.0830s.

EUR/USD has risen above 1.0900. Economists at ING analyze the pair’s outlook. 

European equities enjoy prospects of a lower trajectory for global policy rates

• EUR/USD gains ground on dovish remarks from the Federal Reserve.
• Fed Chair Powell underscored the persistent nature of price growth remains a significant concern.
• ECB’s Lagarde underscored concerns regarding lower wage inflation.

EUR/USD extends its gains for the second consecutive session as the US Federal Reserve (Fed) maintained its benchmark rates at 5.5% during Wednesday's policy meeting. The pair rises to near 1.0930 during the Asian trading hours on Thursday.

In the post-meeting press conference, Federal Reserve (Fed) Chair Jerome Powell's remarks, indicating a dovish stance, further weighed down the Greenback. Powell underscored that while inflation is exhibiting signs of moderation, the persistent nature of price growth remains a significant concern that the Fed cannot overlook.

Investor sentiment reflects expectations of further easing measures in 2024, despite the Federal Open Market Committee (FOMC) projecting stronger growth throughout 2024 and 2025 than initially anticipated. Notably, the FOMC's Dot Plot of interest rate expectations also saw an uptick in the long tail end of the curve. The rate is forecasted to reach around 3.1% in end-2026, compared to the previous projection of 2.9%.

On the European front, President of the European Central Bank (ECB), Christine Lagarde, underscored concerns regarding lower wage inflation, a factor previously emphasized by the ECB as pivotal in determining future policy decisions.

Additionally, the Vice-President of the ECB, Luis de Guindos, cautioned against premature action, stating that a wait-and-see approach is warranted due to persistently high service inflation. Echoing this sentiment, ECB policymaker Pablo Hernandez de Cos hinted at the possibility of rate cuts in June, contingent upon incoming data.

• EUR/USD bumped towards 1.0900 after Fed held steady.
• Fed Dot Plot still sees 75 bps in 2024.
• Fed expects rates to be held higher by end of 2026.

EUR/USD jumped on reaction to the Federal Reserve’s (Fed) latest rate call, which held rates at 5.5% as markets had broadly predicted. Investor expectations are pricing in additional easing in 2024, despite the Federal Open Market Committee seeing stronger growth through 2024 and 2025 than initially expected. The FOMC’s Dot Plot of interest rate expectations also saw a rise in the long tail end of the curve, with end-2026 rates now forecast to land somewhere around 3.1% versus the previous 2.9%.

The Fed is now projecting a higher long-term policy rate through December, ticking up to 2.6% from 2.5%, but markets are shrugging off the Fed’s growth expectations to push down the US Dollar (USD), sending the Euro (EUR) higher. EUR/USD crossed 1.0890 following the market’s pre-baked reaction to the Fed’s rate call. Investors will now buckle down for the short wait to Fed Chairman Jerome Powell’s press conference slated for the bottom of the hour at 18:30 GMT.

Read more: Fed leaves interest rate unchanged at 5.25%-5.5% as forecast

EUR/USD 5-minute chart

Economists at ING expect the EUR/USD pair to trend higher throughout the second half of 2024.

The Fed is the single most important driver of EUR/USD

EUR/USD held steady below 1.0900. Economists at Commerzbank analyze how the Fed decision could impact the pair.

‘Dot plot’ is where the greatest potential for a decent Dollar movement lies

EUR/USD dips back to the lows 1.0800s. Economists at Scotiabank analyze the pair’s outlook.

The short-term downtrend is gathering momentum

• EUR/USD recovers and oscillates in a range in the upper 1.0800s ahead of Wednesday’s Fed meeting. 
• Speculation is mounting that the Fed could alter how many interest rate cuts it expects to make in 2024. 
• Several ECB rate-setters are scheduled to take the stand at a conference on monetary policy.
   

EUR/USD seesaws between tepid gains and losses on Wednesday, forming a range in the upper 1.0800s after rebounding from Tuesday’s 1.0830 lows on increased probabilities the Federal Reserve (Fed) will cut interest rates by June.  

Interest rates, set by central banks, are a key driver of foreign exchange markets.  Lower interest rates tend to depreciate a currency by attracting less foreign capital inflows and vice versa for higher interest rates. 

EUR/USD rebounds as June bets pick up

EUR/USD has recovered marginally ahead of the Federal Reserve’s March Federal Open Market Committee (FOMC) meeting on Wednesday, the outcomes of which will be announced at 18:00 GMT. Bets that the Fed will start cutting interest rates – currently at 5.25%-5-50% for the Fed Funds Rate – by June are increasing.  

According to the CME FedWatch Tool, which uses Fed Fund Futures to calculate the probability of future changes in the Fed Funds Rate, the probability of the Fed cutting rates by June is 64.0%, and 78.9% by July. 

This marks an increase from the 55.1% and 73.7%, respectively, seen on Tuesday. This change in expectations could be responsible for the recovery in EUR/USD, which measures the value of a Euro in US Dollars. 

Fed could change forecasts 

The Fed is not expected to alter interest rates at its meeting but there is a chance it could revise its quarterly forecasts and accompanying statement. This could change the outlook for interest rates and therefore the US Dollar (USD) valuation. 

EUR/USD could see volatility after the Fed meeting. Speculation is mounting that the Federal Reserve will revise its economic forecasts in the Summary of Economic Projections (SEP), and the “dot plot”, which reflects the Board of Governors of the Fed’s consensus of the future path of rates. 

In the previous SEP, officials forecast three 25 basis points (0.25%) rate cuts in 2024 but some analysts now think there is a material risk that this could be revised down to two 25 bps cuts to reflect inflationary pressures remaining elevated. 

“The summary of economic projections will be updated and contains hawkish risks in our assessment with the committee potentially projecting fewer cuts in 2024,” says David Doyle, head of economics at Macquarie, in a note about the Fed meeting. 

ECB speakers set to take the stand

In Europe, a similar debate is going on about when to begin cutting interest rates, with two camps emerging – those who favor waiting until the European Central Bank’s June meeting to decide (the official camp) and a smaller mutineering group who want to keep alive the possibility of an early spring rate cut. 

On Tuesday, Vice-President of the European Central Bank (ECB), Luis de Guindos, maintained allegiance with the June camp after he said “we have to wait,” because “services inflation” remains too high. 

Wednesday will see a host of ECB talking heads appear in public who could provide further intelligence on which way the ECB is swinging. This may also impact EUR/USD volatility. 

The ECB President Christine Lagarde, ECB Chief Economist Philip Lane and ECB Executive Board member Isabel Schnabel are all set to speak at an "ECB and its Watchers" conference today, with Lagarde kicking off at 8.45 GMT, Lane at 9.30 and Schnabel at 13:45. 

Later, the President of the Bundesbank, Joachim Nagel, is scheduled to take the podium at a  “Future of European Finance" conference at the ASKO Europa-Stiftung Foundation.

Technical Analysis: EUR/USD falls below key level 

EUR/USD has penetrated below the level of the 1.0867 swing lows and in doing so probably reversed the direction of the short-term uptrend. Now the odds slightly favor more losses. 

 Euro versus US Dollar: 4-hour chart

Subject to fundamentals, the price will probably continue to fall to the next key support level at roughly 1.0800 – the lows of wave B of the Measured Move that unfolded in February and early March. 

Thursday’s sell-off fell to a low of 1.0835 before recovering and thereby forming a bullish Japanese hammer reversal candlestick pattern on the 4-hour chart. This was followed by a little move higher. Since candlesticks are only short-term patterns, this upside could be at risk of petering out. 

The daily chart below is showing the Moving Average Convergence/ Divergence (MACD) momentum indicator crossing over the signal line, giving a bearish sell signal, and adding further evidence to a change of trend. 

However, it is also flagging up some key barriers to progress lower in the form of dynamic support from the red 50-day and then the green 200-day Simple Moving Averages (SMA). 

 Euro versus US Dollar: Daily chart

On Tuesday price penetrated the 50-day SMA situated at 1.0848 but was repulsed by the 200-day SMA at 1.0839. As on the 4-hour chart, the price recovered and formed a hammer candlestick on the daily chart as well. 

For confirmation of the hammer’s bullish reversal potential, Wednesday needs to end on a bullish note as a green candlestick. If that is the case, EUR/USD is likely to continue its recovery higher.

EUR/USD ended lower on Tuesday despite a bounce in the German ZEW investor survey back to levels last seen in early 2022. Economists at ING analyze the pair’s outlook ahead of the FOMC meeting.

ECB big hitters on the wire today

• EUR/USD attracts some buyers and moves away from a two-week low set on Tuesday.
• The technical setup warrants some caution for bullish trades ahead of the Fed decision.
• A sustained break below the 1.0835 confluence should pave the way for deeper losses.

The EUR/USD pair edges higher during the Asian session on Wednesday and for now, seems to have snapped a two-day losing streak to a nearly two-week low, around the 1.0835 region touched the previous day. Spot prices, however, lack follow-through buying as traders seem reluctant to place aggressive bets and prefer to wait on the sidelines ahead of the outcome of the highly anticipated two-day FOMC policy meeting later today.

The Federal Reserve (Fed) is widely expected to keep rates at their historic highs, though might lower its projection for rate cuts in 2024 to two from three previously in the wake of still-sticky inflation. Hence, the focus will remain glued to the so-called "dot plot", which, along with Fed Chair Jerome Powell's remarks, will be scrutinized for cues about the future rate-cut path. This, in turn, will play a key role in influencing the US Dollar (USD) price dynamics and provide a fresh directional impetus to the EUR/USD pair.

From a technical perspective, the recent pullback from the 1.0980 region, or the highest level since January 12 touched earlier this month, stalled near the 1.0835 confluence support. The said area comprises the very important 200-day Simple Moving Average (SMA) and the 50% Fibonacci retracement level of the February-March positive move, which might continue to protect the immediate downside and act as a key pivotal point. A convincing break below will be seen as a fresh trigger for bears and drag the EUR/USD pair lower.

Given that oscillators on the daily chart have just started gaining negative traction, spot prices might then accelerate the fall to the 1.0800 mark, or the 61.8% Fibo. level, en route to the 1.0760-1.0755 region. Some follow-through selling could make the EUR/USD pair vulnerable to retesting sub-1.0700 levels, or the YTD low touched on February 14.

On the flip side, any subsequent move up is likely to confront stiff resistance near the 1.0900 round-figure mark, nearing the 23.6% Fibo. support breakpoint. A sustained strength beyond will suggest that the corrective pullback has run its course and lift the EUR/USD pair back to the monthly peak, around the 1.0980 region. The momentum could get extended further beyond the 1.1000 psychological mark, towards the next relevant hurdle near the 1.1040 zone.

EUR/USD daily chart

• EUR/USD trades flat around 1.0865 near multi-week lows amid the consolidation of the USD. 
• The FOMC is expected to hold the interest rate and maintain macroeconomic projections at its March meeting on Wednesday. 
• The Eurozone ZEW Economic Sentiment came in at 33.5 in March vs. 25.0 prior, better than expected. 
• The FOMC monetary policy meeting will be in the spotlight on Wednesday. 

The EUR/USD pair trades on a flat note above the mid-1.0800s during the early Asian session on Wednesday. Meanwhile, the USD Index (DXY) consolidates its gains near three-week highs of 103.80. Traders await the Federal Open Market Committee's (FOMC) monetary policy meeting later in the day and will take more cues from Chairman Jerome Powell’s press conference and economic projections after the meeting. At press time, the major pair is trading at 1.0865, unchanged for the day. 

The Federal Open Market Committee (FOMC) is widely expected to keep its key federal funds interest rate unchanged in a range of 5.25% to 5.5%.and maintain macroeconomic projections at its March meeting on Wednesday. Analysts anticipate FOMC’s Powell to reiterate that the central bank wants to see evidence of inflation data in its battle against inflation before cutting rates. Financial markets expect a 25 basis points (bps) rate cut in July and total cuts of 100 bps this year. The US Dollar (USD) has attracted some buyers in the last sessions as the market’s expectations for rate cuts have been dialed back. 

Across the pond, the ZEW Economic Sentiment for the Eurozone rose to 33.5 in March from the previous reading of 25.0, above the market consensus of 25.4. Meanwhile, the Economic expectations for Germany improved to 31.7 versus 19.9 prior. The reports suggested a more optimistic outlook for the Eurozone and Germany. However, the survey failed to boost the Euro (EUR) as traders prefer to wait on the sidelines ahead of the FOMC interest rate decision. 

The European Central Bank (ECB) President Christine Lagarde is set to speak on Wednesday, and the European Commission will release its flash Consumer Confidence report for March. The FOMC monetary policy meeting will take center stage later on Wednesday. After the meeting, the attention will turn to Powell’s press conference, which might provide information on the central bank's outlook.