Investing.com – After a bullish start to the day, which gave rise to a brief return above 1.07, the bearish trend resumed on the EUR/USD pair on Tuesday, and caution remains in order this Tuesday as forex traders eagerly await the evening Fed meeting.
Indeed, although there is no doubt that the Fed will not raise rates tonight , according to the Investing.com rate barometer, investors are waiting for details that will allow them to know whether to expect an additional rate hike before the end of the year or not.
For now, investors are pricing in a near 40% probability for this scenario, roughly balanced expectations that EUR/USD could react strongly regardless of the outcome.
If the Fed indicates in its statement, forecast or in Powell's speech that the rate hike is over, the dollar should suffer, which would have a bullish impact on EUR/USD. If the Federal Reserve suggests on the contrary that it is likely to tighten its policy again, the Euro Dollar should on the other hand fall.
Technical thresholds to watch on EUR/USD against the Fed
From a graphical point of view, we can see that the daily chart below that the underlying trend of EUR/USD is clearly bearish.
At this stage, the most likely scenario is therefore a continued decline, aiming for the key support area of 1.0635. Then, little concrete support can be identified before the 1.05 zone.
If the Euro Dollar takes the upward path, against the Fed or before, it is the psychological threshold of 1.07 which will be the first obstacle to consider, before last week's peak at 1.0770, then 1.08, and the 200-day MA located at 1.0828 at the time of writing this article.
EUR/USD under pressure, the Forex plays it safe for fear of a hawkish Fed