EURUSD Forecast: Trendline support broken but not convincingly. Eyes on FOMC today

About Setyo Wibowo:

Living in East Java, Indonesia and holding International Relations degree, Setyo Wibowo began his forex trading career by joining Fortune Channel Investment in 2000 as a market analyst, while learning to trade forex independently on his own. Driven by his desire to share his trading experiences and ideas, Setyo joined the FX Instructor team in 2008. Setyo Wibowo is now living in Mojokerto, East Java, Indonesia.

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We have a significant technical event yesterday. As you can see in my daily chart below, the trendline support has been violated to the downside, bottomed at 1.4625. This fact should trigger further weakness for the Euro with 1.4450 as technical target, but we need to be very careful here since the pair closed much higher at 1.4716 indicating limited bearish. Every time a trendline support is broken, oftenly price retreat to the upside and testing the trendline area, which is now become a resistance. So, as long as the pair stay below the trendline, expect further bearish scenario.

From h4 chart point of view, as you can see below, indecisive market indicated by range area of 1.4850 – 1.4680 since last week was broken to the downside, but price retreat to the upside and now back inside the range area. This should be seen as a false breakdown for now which is usually trigger significant upside pullback, so please be very patient at this situation. Technically, we need a consistent move below 1.4680 to confirm bearish scenario towards 1.4450 area.

Like I said yesterday, we will have some key fundamental numbers this week. Although it looks like technical movement already a step ahead of fundamental events, we know that these news will be the market mover. Today the FOMC is going to announce the interest rate. While it’s more likely that they will leave funds rate unchanged at <0.25%, investor’s focus will be at the statement about economic condition. If they give an optimistic view about economic recovery progress, the Dollar should be weaken as risk appetite increase. On the other hand, if they give a pessimistic view, Dollar should gain as risk aversion increase.