Explore FOMC Spotlight: Analyzing EUR/USD Rising Wedge Breakout – Crucial Insights for Strategic Decision-Making.
The Euro to US Dollar (EUR/USD) price forecast suggests that the Euro is vulnerable, especially as all attention shifts towards the Federal Open Market Committee (FOMC) announcement. In today’s analysis, the focus is on the FOMC announcement. There is speculation about a potential breakout in the rising wedge pattern for EUR/USD, which could lead to a further decline in the Euro.
FOMC Spotlight: EUR/USD Rising Wedge Breakout and Euro’s Fate
Examining the fundamental backdrop for the Euro, all eyes are on the Federal Reserve’s interest rate decision. Expectations of a rate pause are almost inevitable at 99.5%, as indicated by the implied Fed funds futures table. Despite robust recent US economic data, including strong GDP, persistent inflation pressures, and a resilient labor market, the high US Treasury yields might reduce the necessity for additional rate hikes. Without a rate change, the US dollar could remain stable, keeping the Euro under pressure.
Looking from a Euro perspective, recent weak Chinese PMI data and bleak growth prospects in the region are negative factors for the Euro. Additionally, ongoing geopolitical issues, such as the Israel-Hamas conflict, continue to bolster the haven appeal of the US dollar.
Regarding technical analysis, the EUR/USD shows a developing rising wedge/bear flag pattern. If the price breaches the wedge/flag support, it could indicate further downside. Bulls have struggled to surpass the 50-day moving average, and the upcoming FOMC catalyst might trigger a breakout in the pattern. The Relative Strength Index (RSI) hovers around its midpoint, indicating a lack of preference for bullish or bearish momentum (hesitancy).
Key resistance levels include 1.0635 (50-day moving average) and 1.0600, while support levels are 1.0500, 1.0443, and 1.0300.
Retail traders exhibit bearish sentiment, with 68% holding long positions on EUR/USD, per IG Client Sentiment data.
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