The EUR/USD pair is back above the 1.21 level on general dollar weakness ahead of the Fed meeting. After the ECB’s decision last Thursday, the pair bounced from the 1.20 level and closed the trading week at the highs. With no important economic events today, the chances are that traders will try to push the pair even higher.
However, the EUR/USD is at dynamic resistance. It meets the main bearish trendline, thus making it interesting to sell it short with a huge risk-reward ratio.
This week is all about the Fed. The central bank is facing a tough decision as investors prepare for the tapering of the asset purchases. While the market does not expect the Fed to announce any tapering at this week’s meeting, Powell’s words will be carefully scrutinized for hints about future moves. If the Bank of Canada is of any indication, we may see some surprising announcement from the Fed.
EUR/USD Technical Analysis
The weak dollar theme dominates financial markets at the moment. The weakness is seen not only on the EUR/USD pair, but on all dollar pairs.
From a technical perspective, the EUR/USD has met dynamic resistance, and bears are likely to step in. By selling it against the previous lower high and targeting a new lower low, bears get a risk-reward ratio bigger than 1:3.