Despite being sideways for a month, the EURUSD has some interesting technicals developing.
We saw the euro reclaim the 1.0760 horizontal level on Tuesday. And, so far, that’s holding as new support.
However, there’s a 4-hour trend line from February that has been influential in March.
EURUSD is testing that level today ahead of FOMC, starting today at 2 pm EST.
This doesn’t mean the euro can’t break higher following today’s Fed rate decision and press conference.
But as mentioned recently, dollar shorts must be careful while the US Dollar Index (DXY) is above the 102.60 area.
In many ways, the DXY chart above is cleaner than EURUSD.
And despite their inverse relationship, they aren’t exactly (inversely) correlated, so using the DXY as a proxy can be beneficial.
For EURUSD, the future direction comes down to 1.0760 and 1.0850.
A daily close back below 1.0760 would be bearish toward the 1.0530 range lows.
Alternatively, a bullish breakout from the 4-hour trend line above would target the 1.0850 resistance level.
That 1.0850 EURUSD level is the equivalent of 102.60 on the DXY chart, so it’s one to watch.
I don’t have a strong conviction one way or the other right now, which is why I’m standing aside.
But I do think 1.0850 will attract intense selling pressure if tested.
That said, a daily close back below 1.0760 would be the most apparent short trigger, with a sustained break above 1.0850 opening up 1.0930.
Join us in Discord to see exactly how I’m trading EURUSD this week, and watch the DXY, EURUSD, GBPUSD, and USDCAD video I just released to members!