EUR/USD Defends Rebound from Monthly Low Ahead of Fed Rate Decision
EUR/USD appears to be defending the rebound from the monthly low (1.1266) as it no longer carves a series of lower highs and lows.
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US Dollar Outlook: EUR/USD
EUR/USD appears to be defending the rebound from the monthly low (1.1266) as it no longer carves a series of lower highs and lows, and the exchange rate may continue to track the positive slope in the 50-Day SMA (1.1012) as it holds above the moving average.
EUR/USD Defends Rebound from Monthly Low Ahead of Fed Rate Decision
In turn, the opening range for May is in focus for EUR/USD as it attempts to extend the advance from the start of the week, and the decline from the April high (1.1573) may turn out to be temporary as the exchange rate establishes a bullish trend.
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However, the Federal Reserve interest rate decision may sway EUR/USD even though the central bank is expected to retain the current policy as the Federal Open Market Committee (FOMC) seems to be in no rush to further unwind its restrictive policy.
US Economic Calendar
It seems as though the FOMC will stick to the sidelines as Chairman Jerome Powell insists that ‘we do not need to be in a hurry to adjust our policy stance,’ and more of the same from the central bank may generate a bullish reaction in the Greenback as it curbs speculation for an imminent Fed rate cut.
As a result, EUR/USD may consolidate over the remainder of the week, but the Fed may retain the current course for monetary policy as the ‘median participant projects that the appropriate level of the federal funds rate will be 3.9 percent at the end of this year.’
With that said, EUR/USD may extend the advance from the start of the week should the Fed offer a dovish forward guidance, and the exchange rate may stage further attempts to test the November 2021 high (1.1617) should it continue to track the positive slope in the 50-Day SMA (1.1012).
EUR/USD Chart – Daily
Chart Prepared by David Song, Senior Strategist; EUR/USD on TradingView
- EUR/USD holds above the monthly low (1.1266) as it attempts to extend the advance from the start of the week, with a move/close above the 1.1390 (78.6% Fibonacci extension) to 1.1440 (61.8% Fibonacci extension) zone bringing 1.1560 (100% Fibonacci extension) back on the radar.
- A breach above the April high (1.1573) opens up the November 2021 high (1.1617), with the next area of interest coming in around 1.1690 (78.6% Fibonacci extension) to 1.1750 (78.6% Fibonacci retracement).
- However, failure to defend the 1.1260 (61.8% Fibonacci extension) to 1.1280 (61.8% Fibonacci retracement) region may push EUR/USD towards 1.1170 (50% Fibonacci retracement), with the next area of interest coming in around 1.1070 (23.6% Fibonacci retracement) to 1.1090 (38.2% Fibonacci extension).
Additional Market Outlooks
USD/JPY Rebound Unravels with Fed Rate Decision on Tap
British Pound Forecast: GBP/USD Selloff Stalls Ahead of BoE Meeting
Canadian Dollar Forecast: USD/CAD Vulnerable to Fresh Yearly Lows
Australian Dollar Forecast: AUD/USD Pulls Back Ahead of December High
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
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