EUR/USD Video 16.09.20.
Euro Stays Mostly Flat Against U.S. Dollar
EUR/USD managed to stay above the 20 EMA at 1.1840 but failed to gain more upside momentum as the U.S. dollar remains flat against a broad basket of currencies.
The U.S. Dollar Index has recently made an attempt to settle below the 93 level but returned back to the 20 EMA at 93.10. Today, the U.S. Fed will announce its Interest Rate Decision. The interest rate is expected to stay unchanged, and traders will focus on Fed’s commentary.
The Fed has adopted an average inflation target of 2% but has not indicated its exact level of tolerance for higher inflation. This is the main question for the market right now.
If the Fed does not make any additional announcements to clarify its position on inflation, the U.S. dollar may gain more ground against a broad basket of currencies which will be bearish for EUR/USD.
Yesterday, EU reported that ZEW Economic Sentiment Index increased from 64.0 in August to 73.9 in September despite the continued problems with the virus in Europe. This is a positive development of the European economy, but near-term EUR/USD trading dynamics will mostly depend on U.S. Fed’s commentary.
EUR/USD failed to get above the resistance at 1.1910 but managed to stay above the 20 EMA at 1.1840. In case EUR/USD declined below the support at 1.1840, it will gain more downside momentum and head towards the next material support level at the recent lows at 1.1765.
The support at 1.1765 is set to be strong as the 50 EMA has already risen to 1.1750. A move below the 50 EMA will signal that EUR/USD is ready to establish a new downside trend.
On the upside, EUR/USD needs to get above the resistance at 1.1910 in order to continue its upside move. If this happens, EUR/USD will head towards the next resistance level at 1.1965, which is followed by the major resistance at 1.2000.
EUR/USD trading dynamics may stay muted before the Fed Interest Rate Decision announcement, and significant volatility should be expected during the Fed Press Conference.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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