EUR/USD Price Analysis: Plummets 90 pips towards 1.0400 ahead of the FOMC meeting

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  • The shared currency is down almost 1% in the week.
  • A risk-off market mood caused a bloodbath in equities, but the Asian stocks are poised for a higher open.
  • EUR/USD Price Analysis: The pair would remain range-bound ahead of June’s Fed meeting.

The EUR/USD tanks for the third straight day as traders prepare for an aggressive rate hike by the Federal Reserve, with Wall Street’s expecting a 75 bps increase to the Federal Funds Rate (FFR) on Wednesday. The aforementioned shifted sentiment sour since late Monday and has carried on. At the time of writing, the EUR/USD is trading at 1.0420, set to range-bound ahead of the FOMC’s monetary policy decision.

Sentiment remains negative. US equities finished with hefty losses, while Asian stocks are set to open higher. US Treasury yields spiked, led by the US 10-year benchmark note coupon at 11-year highs above 3.49%, as bets that the Federal Reserve would hike more than 50 bps. The greenback followed suit and is rising, as depicted by the US Dollar Index, up 0.26%, at 105.477.

During the Tuesday trading session, the EUR/USD opened near the session’s lows around 1.0406 and edged higher as a reaction to German inflation data, printing a daily high around 1.0485. However, the EUR/USD erased those losses and settled near 1.0415.

EUR/USD Price Analysis: Technical outlook

From a daily chart perspective, the EUR/USD is still downward pressured. Last Friday’s dip below the 50-day moving average (DMA) at 1.0687 exacerbated the downtrend since the major dropped almost 300 pips. Despite the size of the move, the Relative Strength Index (RSI) at 35.88 still has some room to spare before reaching oversold readings.

The EUR/USD in the near term would remain trapped in the 1.0400-1.0490 range, as it usually happens, ahead of the FOMC’s monetary policy meeting. Nevertheless, some levels could be tested into the FOMC meeting and after the decision is revealed. Upwards, the EUR/USD’s first resistance would be the daily pivot point at 1.0432. Break above would expose the 50-hour simple moving average (SMA) at 1.0443, followed by the R1 pivot point at 1.0468 and the June 14 high at 1.0484. On the flip side, the EUR/USD first support would be 1.0400. A breach of the latter would expose the S1 daily pivot at 1.0379, followed by the May 13 daily low at 1.0348.

Key Technical Levels