Current trend

The EUR/USD pair is developing an upward momentum caused by expectations of easing the monetary policy of the US Fed and reached the resistance level of 1.1130.

Today at 20:00 (GMT 2), the decision of the American regulator on the interest rate is due. Analysts expect the indicator to be adjusted by –25 basis points to 5.25%, although swap markets, according to the Chicago Mercantile Exchange (CME) FedWatch Instrument, expect a change of –50 basis points to 5.00% with a probability of 67.0%, while last week it barely exceeded 30.0%. Such a division of opinions will likely persist until the publication of the decision in the evening, limiting the strengthening of the asset. In addition, the regulator may strengthen the “dovish” rhetoric until the end of the year. Thus, with a minimal reduction in the US interest rate, the euro may adjust to the support level of 1.1010. Otherwise, the dollar may lose ground, and the EUR/USD pair may reach the August high of 1.1200. Much will depend on the content of the accompanying statement, which is due along with the interest rate decision.

Macroeconomic statistics from the US reflected a slowdown in retail sales dynamics from 1.1% to 0.1% in August compared to forecasts of –0.2%, and the indicator excluding motor transport – from 0.4% to 0.1% against 0.2%. At the same time, industrial production volumes accelerated from –0.6% to 0.8%, although experts expected 0.2%. In the EU, meanwhile, there is a further decline in economic sentiment, which puts pressure on the euro. The German business sentiment index from the Center for European Economic Research (ZEW) changed from 19.2 points to 3.6 points in September, while analysts expected 17.1 points, and in the EU – from 17.9 points to 9.3 points with a forecast of 17.6 points.

In the long term, the trading instrument is moving in an upward trend. In August, the price formed a high of 1.1200 and went into correction, reaching the support level of 1.1010. The growth continued to the resistance area of ​​1.1130. After a breakdown, a test of 1.1200 and 1.1275 is likely. Otherwise, the negative dynamics may continue, with the targets of 1.1010 and 1.0910. The medium-term trend is upward: at the end of August, the asset reached zone 3 (1.1186–1.1170), from where it corrected to the trend support area of ​​1.1033–1.1016 and returned to growth to zone 3. After a breakout, an increase to zone 4 (1.1354–1.1338) is likely. In case of a breakdown of the support area of ​​1.1033–1.1016, the medium-term trend will reverse downwards, and short positions, with the target in zone 2 (1.0865–1.0848) are relevant.

Support and resistance

Resistance levels: 1.1130, 1.1200, 1.1275.

Support levels: 1.1010, 1.0910, 1.0785.

Trading tips

Short positions may be opened from 1.1130, with the target at 1.1010 and stop loss 1.1170. Implementation period: 9–12 days.

Long positions may be opened above 1.1170, with the target at 1.1275 and stop loss 1.1125.