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The EURUSD pair bounced sharply from just above the 1.0800 level last week as the US dollar index hit hard resistance and traders booked profit ahead of the ECB meeting.
This week traders look to the FED interest rate decision and economic projections, which are likely to have a profound effect of the EURUSD pair and to a greater degree the US dollar index.
Stocks are still on shaky ground, so this could be a proxy for more downside in the EURUSD pair. It could be very difficult for the euro to rally far while Ukraine conflict rages on.
Expectations are high that the FED are going to raise rates by 0.25 or even 0.50%. Should we see a more hawkish FED it could be heavily EURUSD negative.
According to the ActivTrader market sentiment tool 65 percent of traders are bullish towards this pair, with the sentiment decreasing by around 16 percent from last week.
I believe that the positive positioning skew amongst retail traders is a bearish occurrence, and we probably need to see traders turning wholesale bearish before thinking about a medium-term long position.
EURUSD Short-Term Technical Analysis
The four-hour time frame shows that the EURUSD pair has retested a formed breakout spot, around 1.1100, making this area a key price zone this week.
This week, watch out for another big failure before the 1.1100 level to mark the next big down move. A move above the 1.1100 level could cause a rally towards the 1.1250 level.
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EURUSD Medium-Term Technical Analysis
Looking at the weekly time frame and the EURUSD pair tested, and crucially bounced, from the bottom of an extremely large wedge price pattern.
Should we see a move under the wedge pattern it could mark a huge price collapse. However, if the 1.0800 level remains defended, upside risks start to increase.
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