EUR/USD scales 10-day MA ahead of the Fed

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• EUR/USD has aborted the short-term bearish view with a move above the 10-day MA.
• The Fed is expected to keep rates unchanged today and may tilt slightly to hawkish side.

EUR/USD closed above the 10-day moving average (MA) on Tuesday, neutralizing the immediate bearish setup ahead of the all-important FOMC rate decision.

The currency pair logged its first three-day winning run in over a month with a 0.27% rise as the Eurozone first quarter GDP and the German inflation figure bettered estimated, suggesting the European Central Bank (ECB) may not have to easy policy further anytime soon.

A bullish reversal above 1.1324 (April 17 high), however, will likely remain elusive, as the Fed has little room to turn dovish by dropping rate hike hints, given the sustained labor market strength and record highs in stocks.

The central bank is expected to keep rates unchanged at 2.25%-2.5% and may put a bid under the greenback by taking note of the recent improvements in the economy.

Further, recently released forward-looking Eurozone indicators indicate there is no clear path to above trend growth, according to Greg Gibbs, Analyst at Amplifying Global FX Capital Pty Ltd.

That said, the pair may challenge the 50-day moving average, currently at 1.1274, if the Fed sounds dovish. Ahead of the Fed, the pair may take cues from ECB’s De Guindos speech and the US ISM manufacturing number.

As of writing, the spot is trading largely unchanged in the day at 1.1218.

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