EUR/USD keeps close to 1.1900 for the time being but that can all change before the end of the day
So, what are the key levels in play as we look towards the Fed?
Going by the near-term chart first, the 100 and 200-hour moving average (red and blue lines respectively) @ 1.1916-36 are going to be ones to watch in determining the near-term bias in the pair.
For now, sellers are in near-term control but there is little conviction to really chase any further moves given that the market is waiting on the Fed. And if you want to argue further, there is also a large expiry rolling off at 1.1900 today.
Should the Fed's dovishness override the market mood, a push above the key hourly moving averages will see the pair likely move towards 1.2000 next with the 38.2 retracement level @ 1.1991 also offering some minor resistance – as seen last week.
Also, keep in mind that there are large expiries rolling off tomorrow and on Friday at the 1.2000 level so that could also keep any upside momentum in-check.
That will add to some fundamental argument that the euro is also in a bit of a pickle as the virus situation and vaccine rollout has been far from ideal recently.
The vaccine divergence is one thing while the fiscal divergence (US set to outpace Europe again) is also another factor to argue for selling rallies in EUR/USD for now.
Looking towards support levels, the anchor is seen around 1.1900 for now but if sellers start to push the agenda, then key daily levels will be called upon:
The 9 March low, 200-day moving average (blue line) and trendline support in the region of 1.1836-52 will be key in limiting any downside movement.
A break below that region may trigger more stops on the way down and could see EUR/USD slide rather rapidly towards 1.1800 – especially if the bond rout gathers pace.
Even if Powell does stick to a more dovish rhetoric, the dot plots reaffirming the market pricing of a rate hike in 2023 and the absence of an SLR extension could just be enough to trigger some outsized moves in the market ahead of the weekend.