EUR/USD Holding Its Breath Awaiting The Fed And Looks Slightly Bullish

The EUR/USD is trading in a very narrow range as the Fed decision is awaited.

A rate hike is on the cards now and in December, but the future is unknown.

The technical picture tilts slightly in favor of the bulls.

The EUR/USD is trading around 1.1760, moving in a very narrow range of 20 pips at the time of writing. The listless moves are unsurprising in days like these. The US Federal Reserve will announce its decision at 18:00 with Fed Chair Jerome Powell speaking at 18:30.

The central bank will raise interest rates for the third time this year. The move was telegraphed well in advance. They are also highly likely to continue signaling another increase in interest rates in December, via the dot-plot. Markets will likely focus on the projections for interest rates for 2019, 2020, 2021, and the long-term rate.

Will the Fed drop its accommodative monetary policy and go for a tight one? This is the primary question. The hawks seem to have a grip at the moment, the economy is growing at a rapid clip, and wages are on the rise. On the other hand, inflation recently dipped, and Trump’s tariffs pose a risk.

Elsewhere, the Conference Board’s Consumer Confidence measure hit a new 18-year high at 138.4 points in September, another positive figure for the economy. New Home Sales are published later in the day but are not expected to have an impact as markets are laser-focused on the Fed.

Peter Praet of the European Central Bank cooled down the Euro on Tuesday by playing down the hawkish comments by his boss Mario Draghi. Draghi said that inflation is on the rise and hailed increasing wages. Italy is still grappling with a budget as talks within the ruling coalition have gone nowhere fast.

EUR/USD Technical Analysis

The EUR/USD has a small advantage as the pair is trading above the 50 and 200 Simple Moving Averages on the four-hour chart. The Relative Strength Index is broadly balanced, and so is Momentum.

1.1800 is a round number and is the initial level of resistance. 1.1815 is the peak seen earlier in the week, the highest level since July. Further above, 1.1850 was a swing high in June and 1.1915 switches to resistance after supporting the pair back in January.