The EURUSD is in no rush of going nowhere. It literally holds the same levels seen at last Friday’s close. Moreover, since the end of July, the most important currency pair of the FX dashboard just traded sideways.
Two things dominated the price action on the EURUSD this summer – the Jackson Hole event and the first ECB interest rate decision and press conference following the month of August.
While the ECB did disappoint, in the sense that it did not address the low inflation in the Eurozone, the Jackson Hole event was far more important than the market expected. The Fed altered its mandate, and now it is not looking at bringing inflation to the 2% target but bringing average inflation higher.
Focus on the Fed’s Message Later Today
The FOMC press conference later today will be a game-changer for the EURUSD on the short to medium term. While no one expects the Fed to deliver any kind of new easing today, investors will focus on any clues about the new methodology the Fed will use to calculate average inflation.
On any hint that the Fed will let inflation overshoot, or on any hint of a threshold, the EURUSD might react significantly. The risk here is that the Fed will disappoint today, or that the market’s expectations are simply too high.
EURUSD Technical Analysis
The range seen in the EURUSD pair is visible on all other USD pairs. During the summer, the market traded without direction, and it may continue to do so as we get closer and closer to the U.S. elections.
The EURSD pair was supported on dips, and a close below the support line opens the case for a bearish scenario. Bears would want to sell a close below 1.1767 and target the 1.15 area. The invalidation for such a bearish trade comes at 1.19.