EUR/USD is consolidating above the 21 SMA located at 1.0526, above the symmetrical triangle pattern and above the 3/8 Murray. The euro seems to be showing some optimism. If it remains trading above 1.0498 in the next few hours, there may be a recovery of the pair.
The movements are being limited and are becoming shorter because the market is in suspense about the decision of the Federal Reserve. The central bank is expected to raise the interest rate by 0.50% and announce the start of the quantitative adjustment program. The policy decisions will be commented on by Fed Chairman Jerome Powell at the press conference.
Powell's speech will be key for the market and could generate volatility, forcing EUR/USD to hit 4/8 Murray at around 1.0742.
In case the Fed prefaces another 0.50% increase at the next policy meeting, it could further weaken the euro and EUR/USD could fall towards the support of 1.0457 (March 2015) and 1.0350 (January 2017).
Since May 3, the eagle indicator has reached the 5-point level that represents an extremely oversold level. If the euro consolidates above 1.0526 in the next few hours, it is likely to reach 1.0600 and even 1.0742, which is the top of the downtrend channel formed on March 28.
On the contrary, if the euro breaks below 3/8 Murray (1.0498), it is likely to drop to the level of 1.0457 (2015 low). If the bearish force prevails, EUR/USD could slump towards 1.0350 (2017 low) and finally it could reach 2/8 Murray at 1.0253.
Our trading plan for the next few hours is to buy EUR above 1.0526 with targets at 1.0742 (4/8) and towards the 200 EMA at 1.0810. The eagle indicator is giving a positive signal which supports our bullish strategy.
