EUR/USD Price Eyes September 2018 High, FOMC and Eurozone Q2 GDP on The Horizon

EUR/USD PRICE, NEWS AND ANALYSIS:

• EURUSD rally stalls ahead of the FOMC meeting.
• German, Eurozone and US Q2 GDP readings likely to shift sentiment.

This evening’s FOMC policy meeting will be the next short-term driver of the US dollar, with Fed chair Jerome Powell’s post-meeting press conference expected to update the market on the health of the nation. All policy measures are expected to remain unchanged, but the tone of Powell’s speech and any further dovish guidance may see the greenback fall further, boosting EURUSD.DailyFX senior strategist Chris Vecchio will be covering the FOMC Rate Decision live from 18:45 BST.

How Central Banks Impact the Forex Market

While today’s Fed decision will be the immediate driver for EURUSD, the rest of the week will provide the first look at how much economic damage COVID-19 has caused to the EU economy, and the numbers are expected to be grim. On Thursday, provisional German Q2 GDP data is released at 09:00 BST with the year-on-year rate expected to slump to -11.3% compared to -2.3% in Q1, while on Friday the Eurozone reading is expected to show year-on-year growth contracting by 16.1% compared to a contraction of 5.1% in Q1. The first look at US Q2 GDP is also released on Thursday and is expected to show a huge contraction of 34.1%. The data calendar and release times need to be closely watched for the rest of the week and fundamental analysis remains key.

EUR/USD currently trades around 1.1750 and any further bullish impetus will see the late-September high of 1.1815 come into play. The pair are now in a holding pattern with this week’s lower highs and higher lows compressing short-term price action. The overall technical set-up remains positive with the pair above all three moving averages by a distance, while the medium-term pattern of higher lows adds another layer of support. Support should come into play from last Friday’s high/Monday’s low between 1.1641 and 1.1659.

EUR/USD DAILY PRICE CHART (DECEMBER 2019 – JULY 29, 2020)