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It’s a risk-off kinda vibe in today’s session, and with the Greenback moving ahead of the FOMC decision, we’re checking out EUR/USD for potential short-term opportunities.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on AUD/JPY after an upbeat CPI figure from Australia, so be sure to check that out to see if there is still a potential play!

Equity Markets Bond Yields Commodities & Crypto
DAX: 13614.30 -1.85%
FTSE: 6558.91 -1.43%
S&P 500: 3799.78 -1.29%
NASDAQ: 13487.28 -1.02%
US 10-YR: 1.016% -0.024
Bund 10-YR: -0.552% -0.019
UK 10-YR: 0.263% -0.002
JPN 10-YR: 0.039% +0.01
Oil: 52.49 -0.23%
Gold: 1,845.20 -0.30%
Bitcoin: 39,896.75 -7.59%
Ethereum: 1,241.85 -7.49%

Fresh Market Headlines & Economic Data:

Dow drops more than 400 points as Boeing shares slide, S&P 500 slips from record high

U.S. Mortgage application volume retreats for second weak.

U.S. core capital goods orders rise in boost to business investment

Lockdown further lowers German consumer sentiment, GfK survey shows

UK’s Johnson warns lockdown will last until at least March 8

ECB officials agree to counter investor rate-cut skepticism

Upcoming Potential Catalysts on the Economic Calendar

FOMC Monetary policy statement at 7:00 pm GMT
Fed Press conference at 7:30 pm GMT
Japan Retail sales at 11:50 pm GMT
Australia Trade balance at 12:30 am GMT (Jan. 28)

What to Watch: EUR/USD

EUR/USD 1-Hour Forex Chart
EUR/USD 1-Hour Forex Chart

Lots of action for the Greenback today, ahead of the latest FOMC statement, coming in a few hours at 7:00 pm GMT. Expectations are for the Fed to hold off on any new actions as they continue to watch pandemic developments and stay tuned for any fresh fiscal stimulus measures from the U.S. government.

There is a bit of speculation that we could get optimistic rhetoric on the vaccine situation, which is likely why we’re seeing the U.S. dollar rally; it’s possible traders are taking some risk off the table on the possibility of any Fed optimism.

This brought EUR/USD lower on the session to a minor support area around 1.2060, which has so far held on the session.

If the Fed is more optimistic than expected, we could see 1.2050 – 1.2060 support break, but keep in mind the longer-term trend is higher in EUR/USD.

A downside break may be short-lived and find support around the 1.2000 major psychological level, unless we get hints of the Fed potentially making moves to tighten in 2021 (a very low probability scenario at this point).

If the Fed strong maintains no action for the foreseeable future and/or is not-so-optimistic on vaccine developments / fiscal stimulus, the bounce in EUR/USD may continue without another drop.

Traders from all time frames may see this scenario as greenlight to continue to play the longer-term trend higher and overall U.S. Dollar weakness for now.