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Choppy Trade as Market Awaits FOMC/Fed Powell

EUR
MNI (London)
  • Choppy pre-FOMC markets allowed EUR/USD to break through resistance at $1.2130/40 Tuesday though momentum faltered at $1.2147 before it eased off to $1.2101 in early NY before it settled between $1.2125/30 into the close.
  • Failure to bring pressure to bear on $1.2170 resistance(61.8% 1.2218-1.2093) turns attention back toward $1.2100 ahead of $1.2094/94(Jun14 low/Jun11 low, 61.8% 1.1986-1.2266). Break here to expose $1.2071(May14 low) and the stronger area into $1.2050($1.2052/51 May13 low, 76.4% 1.1986-1.2266/38.2% 1.1704-1.2266). Resistance $1.2129 ahead of $1.2147 with stronger level remaining at $1.2170.
  • FOMC/Powell press conference 1800GMT/1830GMT respectively main focus with the strength of any taper talk to determine next direction for the USD. The Dot Plot also in view for clues to potential rate hike (in 2023).
  • Ahead of FOMC we have ECB Elderson(hawk) speaking at 0800GMT, ECB Guindos 0900GMT. US Housing Starts/Building Permits 1230GMT.
  • MNI Techs: EURUSD is trading closer to recent lows and this week's consolidation appears to be a bear flag. The recent breach of the 50-day EMA and 1.2104, Jun 4 low signals scope for a deeper short-term correction and an extension would expose the next firm support at 1.2052, May 13 low with the 100-dma at 1.2042. On the upside, initial firm resistance is at 1.2218, Jun 9 high. A break would ease the bearish threat and open 1.2266 instead.
MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
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MNI London Bureau | +44 203-586-2231 | john.webb@marketnews.com
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