At the opening of the Asian session, EUR/USD is trading above 3/8 Murray and below the 21 SMA located at 1.0191.
Yesterday, the euro hit a low of 1.0106, weighed down by news coming out of the EU. The news alarmed investors as the escalation of the energy crisis could accelerate the current economic slowdown.
In the American session, the Federal Reserve will announce its decision on monetary policy. The central bank is expected to raise the funds rate by 75 basis points, although there is a possibility of a rate hike by 100 basis points.
The euro is likely to benefit from this increase since the market has already priced in this hike. Hence, the market is likely to react against expectations and EUR/USD could reach levels of 1.0308 (200 EMA) and can even go as high as 1.0498 (6/8 Murray).
If the euro manages to consolidate below 3/8 Murray in the next few hours, it is likely that the downward pressure could continue and the price could fall towards the 2/8 Murray zone located at 1.0008.
On the other hand, in case there is a pullback towards 1.0191 (21 SMA), it will be considered an opportunity to sell and the price could fall to 1.0120, 1.0070, and even 1.0000. In case of losing the parity, the currency pair could reach the 2022 low at 0.9952 (July 14).
Meanwhile, EUR/USD is expected to remain under downward pressure as long as it is trading below the 200 EMA at around 1.0308. In case the price approaches this level and fails to break it, it will be considered an opportunity to sell in the short term.
Negative signs could ease for EUR/USD if it trades above 1.0200 and could again challenge the 4/8 Murray resistance at 1.0253. If the euro gains strength, it should face strong resistance at 1.0308 (200 EMA). If the negotiations are confirmed above this level, more rises would follow and the trading instrument will enter a medium-term bullish cycle.
