EUR/USD clings to gains above 1.06 as USD retreats, Fed eyed

The bulls guarded 1.06 handle and prompted a tepid-bounce in the EUR/USD this Wednesday, with the spot now consolidating the Asian recovery as we progress towards the European opening bells.

The EUR/USD pair closely tracks the USD price-action versus its main peers, as markets gear up for the next big event – the Fed decision, which will set the tone for the major in the coming weeks.

The FOMC committee will conclude its 2-day policy meeting later today, with the outcome widely expected to be a 25 bps rate hike. However, an upgrade to the Dots Plot could be seen as outrightly hawkish, which could trigger an extensive rally in the USD across the board.

The spot all awaits the outcome of the Dutch general election scheduled today, while on the data-front, the US inflation and retail sales figures will have a major impact on the EUR/USD pair.

EUR/USD Technical Levels   

Franco Shao at ForexCycle noted, “EURUSD’s fall from 1.0714 extended to as low as 1.0600. Deeper decline to test the support of the ascending price channel on 4-hours chart is possible. A clear break below the channel support will confirm that the downtrend from 1.0828 has resumed, then next target would be at 1.0400 area. On the upside, as long as the pair stays in the channel, the fall from 1.0714 would possibly be correction of the uptrend from 1.0494, one more rise to 1.0750 area to complete the upward movement is still possible.”