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The EURUSD pair has been settling into the 1.0900 to 1.1000 price range ahead of the Federal Reserve policy meeting, as traders get ready for the next big move in the buck.
Traders will be on high alert later today as the FED decision breaks, and the US central banks economic projections are released. The decision is likely to have profound implications for the EURUSD pair.
Should we see the FED become more hawkish, and talk more rapid rate hikes, then we could easily see the EURUSD pair spiral lower and take a stab at the 1.0500 level.
On the flip side, a more dovish FED could cause the EURUSD pair to break above the 1.1000 level and head towards the 1.1200 resistance zone, as the lower time frame analysis shows a break above the 1.1000 level could trigger a huge wave higher.
Personally, I think with the Ukraine situation, and the fact that inflation is increasing it is more likely than not that we will see more upside in the US dollar index, which will be EURUSD bearish.
According to the ActivTrader market sentiment tool 75 percent of traders are bullish towards this pair, with positive sentiment rising 10 percent since last week, this is bearish.
I believe that the positive positioning skew amongst retail traders is a bearish warning, and we probably need to see traders turning wholesale negative 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 1.1020, making this area a key price zone for breakout traders.
Equally, a move down towards the 1.0800 support level would form a large head and shoulders pattern.
A move above the 1.1020 level could cause a rally towards the 1.1250 level, while a break under the 1.0800 level could cause a collapse towards the 1.0600 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 today, it could mark a huge price collapse of over 1,000 points. However, if the 1.0800 level remains defended, upside risks start to increase.
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