fxtalk

Today is a bug day for all USD based pairs, but the most affected pair will be EUR/USD.

After 28 higher highs and higher lows the pair seemed to end this rally and created some hope for a reversal.

Although, yesterday, the pair tested the 1.4050 barrier we still need to see a break above 1.4080 to negate my bearish outlook. If it will happen, the rally will target the 1.4400 -1.4500 position, with the possibility of breaking above it afterward.

As I said, I maintain my bearish outlook for now, but keep a close eye on EUR/USD. My advise would be not to open any position for now and way for the clear confirmation of a bearish or bullish movement.

FOMC is the major event for today and until it happens it is unlikely to see any major moves in currencies. What to expect from FOMC? Either a short term USD consolidation (which will confirm my bearish expectations, at least on the near future) or to see the USD remaining under pressure, which will give even chances for both bearish and bullish scenarios.

At this moment the markets are expecting a stimulus, and it's no doubt weather the Feds or inject or not. The question is how will they do it?

If the Feds choose to meet or pump in beyond market expectations the USD will remain under pressure and extreme care will be needed when opening new positions on EUR/USD.

If the Feds choose not to match the market expectations for a stimulus, but to pump in just enough to give a clear message that the US economy is on the right track, this will create the conditions for a short-term appreciation on USD.

All in all, I don't expect to see much move into the USD based currencies before the Feds Rate Decision announcement. My suggestion will be not to open any new positions up until the big announcement and, even afterward, keep a close eye on the pair movement. If you are already in the market, be prepared to close your position without profit and come back later when the market will give you clear signals.