The EUR/USD is relatively unchanged today as attention shifts to the Federal Reserve interest rate decision and US GDP data scheduled for Wednesday and Thursday, respectively. The EURUSD pair is trading at 1.2178, which is slightly higher than last week’s low of 1.2050.
What’s happening: While Christine Lagarde will have a speech today, traders will be focusing on the Fed interest rate decision that will come out on Wednesday. That’s because the ECB already released its decision last week and signaled that rates will remain low for a while.
Similarly, the Fed is expected to leave interest rates and quantitative easing policies intact. However, with another stimulus on the way, there is a possibility that the bank will shift its tone. In fact, several FOMC members like Raphael Bostic and Richard Kaplan have welcomed a shift of tone.
The EUR/USD will also react to the US GDP data that will come out on Thursday. Economists expect that the economy expanded, albeit slightly in the fourth quarter.
Turning to the four-hour chart, we see that the EUR/USD is trading at the 23.6% Fibonacci retracement level. In the past few days, it has moved from the 38.2% retracement level. Also, the price is slightly below the first support of the Andrews Pitchfork level.
Therefore, in my view, the pair will likely continue rising so long as it moves above the first pitchfork level. If this happens, the next level to watch will be the pitchfork median level at 1.2310. However, since the pair has formed a head and shoulders pattern, we should not rule out a drop to 1.2050.