The EURUSD is having one of its best days in weeks, just hours before today’s Federal Open Market Committee (FOMC) meeting.
The euro is breaking above the 1.0830 level, and the US Dollar Index (DXY) is plunging below the 103.00 support.
However, today’s price action could change in a hurry.
Big moves before high-impact events like FOMC are prone to reversing aggressively.
That’s because markets are forward-looking, so the most probable resolution to today’s Fed rate decision and press conference get priced in beforehand.
And right now, the stock market is pricing in the best-case scenario.
As for the euro and dollar, I’m keeping a close eye on 102.20-102.50 on the DXY today.
If we’re going to get a post-FOMC reversal from the USD, that’s where it’s likely to occur.
But you don’t want to long or short EURUSD blindly, not on a day like today.
It’s best to wait for a confirmed deviation.
For the EURUSD, that means a higher time frame close above 1.0830 or a higher resistance level, followed by a close back below later this week.
I’ve discussed why I’m favoring shorting euro strength due to the 39-year trend line that broke down last year.
Minor resistance for EURUSD is 1.0870 with a more significant area coming in at 1.0930.
Remember to closely monitor the 102.20-102.50 DXY support area, though.
That may be way to interpret resistance areas on a pair like EURUSD.
Lastly, trading anything ahead of today’s FOMC is ill-advised, so the best way to approach markets is to wait for the initial volatility to subside before entering anything.
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