EURUSD At Channel Top Ahead of Fed

Heading into the FOMC meeting today, EURUSD is sitting at the top of the corrective bearish channel which has framed the decline from the 2021 highs. Price is currently paused just below the channel top which offers two sets of opportunities: if the FOMC sees the Fed striking a more optimistic tone and USD rises, EURUSD is likely to correct sharply back towards the 1.1910 level first, with the rising trend line from 2020 lows coming in beneath. On the other hand, if the FOMC sees the Fed continuing with its tone of caution and USD bulls are disappointed, there is room for a breakout higher targeting the 1.2176 level first and 1.2343 thereafter.

Key Data to Watch

The FOMC will be the main focus of the day as discussed above. We also have ECB's Lagarde on deck today, though, these comments will likely be overshadowed as traders await the FOMC. Finally, we have Biden speaking tonight also which has the potential to drive USD. While Biden’s infrastructure plans will certainly benefit the economy, supporting USD, his tax-hike plans could cause issues so it will be interesting to see which way USD goes in response.

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