Over the last few days, the Single Currency has been treading water in the range of $1.2266/1.2360, with both levels becoming a hard nut to crack, on the back of reports that ECB policymakers are shifting the focus of their debates on the steepness of the ECB‘s interest rate path, while the Federal Reserve is widely expected to raise interest rate by 25 pts at tonight’s FOMC meeting.
Along with some hawkish expectations on U.S Federal Reserve, where it is also expected to review higher the 2019/2020 interest rate forecast, a disappointing German data yesterday is however keeping the euro on a cliff edge for further downside.
The Common currency fell sharply from $1.2360 yesterday to as low as $1.2240, late in New York session, after a surprisingly shocking German Zew survey where economic sentiment among investors drop to 5.1% from 17.8 in February, the lowest since 2016.
On the Daily chart, the odds on the Euro seems to be stacked in the favour of the bears following the daily close of $1.2240 yesterday, well below $1.2266 critical level. Meanwhile, the U.S dollar might turn bullish across the board if the Fed reviews the 2019/20 interest rate forecast higher tonight. In that case, the EUR/USD could possibly extend lower to $1.2045 followed by $1.1795.
On the higher side, only a close above $1.2447 would invalidate our bearish view and would expose the pair for further gains to $1.2550 and $1.2650.
Fasten your seat belt ahead of U.S interest rate decision and Fed Charmain Powell’s speech tonight @ 1800 GMT!!
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