The EUR/USD is wavering today ahead of the important Fed interest rate decision and the flash manufacturing and services PMI numbers. It is trading at 1.2152, which is a few pips below the year-to-date high of 1.2178.
FOMC decision ahead
The EUR/USD price has held relatively steady after the European Central Bank (ECB) delivered its rate decision last week. In the decision, the bank decided to leave interest rate unchanged and boost its quantitative easing program by another 500 billion euros. This brought the total size of the QE to 1.85 trillion euros.
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Further, the pair has also reacted to positive news about the Covid vaccine and the agreement by EU members to pass the recovery fund and the seven-year budget.
Today, focus will be in the United States, where the Fed will kick-off its final monetary policy of the year. The bank will release its decision tomorrow.
In general, analysts expect the bank to leave interest rate unchanged as the members have guided before. Also, they will possibly leave their asset purchases intact as they continue to support the economy.
This decision will come at a difficult period for the bank. For one, it will be the final decision before Donald Trump leaves office.
Also, it will come at a time when the number of Covid cases in the United States is soaring. Just yesterday, the country released more than 184,000 new cases, pushing the overall total to more than 16.6 million. On a positive note, the country has already started distributing the vaccine made by Pfizer.
Further, the meeting comes at a period when the number of initial jobless claims have started to rise. Last week, data showed that more than 800,000 people filed for those claims and there is a possibility that the trend will continue. Writing about the pair, analysts at ING wrote:
“In sum, the ECB did not over-deliver and the new set of measures is not strong enough to outweigh the strong bearish USD dynamics in and there is more upside to EUR/USD. We target 1.25 in 2021, with strong upside risks to 1.30.”
EUR/USD technical analysis
The EUR/USD is trading at 1.2152, which is close to the year-to-date high of 1.2178. On the daily chart, the pair is forming a bullish pennant pattern. As you can try on a free forex demo account, is usually a bullish signal. It is also slightly above the 50-day and 25-day exponential moving averages. Therefore, in the near-term, the pair will possibly break-out higher.