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Before the FOMC meeting, the EUR / USD pair is trading in a narrow range

The EUR / USD pair was trading in a very narrow range on Tuesday in Asia. Many investors took a wait and see attitude before the FOMC meeting. The market does not expect changes in monetary policy, but expects statements from the regulator regarding the latest developments in the debt securities market and new long-term forecasts for rates.

The skyrocketing yields on US government bonds were fueled by heightened expectations that economic growth and inflation could trigger a faster-than-expected normalization of the Fed's monetary policy.

Today the yield on 10-year Treasuries has dropped below 1.6%, but despite this, the dollar index is held in the plus zone, showing a modest increase of 0.03%.

The February retail sales report will be released later in the US. Experts expect a decline in sales compared to January.

In Europe, the main event of the day will be the publication of the ZEW indices for Germany. The indexes are forecast to rise from the previous month as the COVID-19 pandemic improves. Recently, the market has been very weakly reacting to these data, therefore, most likely, the reaction of the euro will be very restrained.

On the chart, sellers are moving the price up to the level of 1.1915. We are waiting for the breakdown of this mark and the development of the downward movement to the 1.1880 area. A false breakdown of the level of 1.1915 will become a strong reversal signal, within which one can expect an increase in quotations to at least 1.1980.

  • Resistance levels: 1.1980, 1.2050, 1.2100.
  • Support levels: 1.1915, 1.1880, 1.1840.

The main scenario is a breakdown of the level of 1.1915 and a decline to 1.1880.

Alternative scenario - a false breakdown of the level of 1.1915 and growth to 1.1980.

The current fundamental background is negative. We consider shorts from the level of 1.1935.

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