Last week, the Euro had a great rally, as it has recovered nicely after the dramatic sell off over the last two weeks.
The pair is relatively unchanged today as interest shifts to the Federal Reserve interest rate decision on and US GDP data scheduled for Wednesday and Thursday, respectively. The EURUSD is trading at 1.2175, which is slightly higher than last week’s low of 1.2050.
While Christine Lagarde will have a speech today, investors will be focusing on the important Fed interest rate decision that will come out on Wednesday. That is because the ECB already released its decision last week and indicated that rates will remain low for a while.
Likewise, the Fed is expected to leave interest rates and quantitative easing policies as is. Nevertheless, with another stimulus expected soon, there is a possibility that the bank will shift its tone. In fact, several FOMC members like Raphael Bostic and Richard Kaplan have welcomed this change.
The Euro pair will also react to the preliminary US GDP data that will come out on Thursday. Economists expect that the US economy expanded, even though faintly in Q4.
Technically, turning to the four-hour chart, we see that the EURUSD pair is trading at the 23.6% Fibonacci retracement level. Last week, it has moved from the 38.2% retracement level. Also, the price is somewhat below the first support of the Andrews Pitchfork level.
This week, we expect that the EURUSD price will range-bound, depending on what will be said about the Covid-19 stimulus bill in the US and the likelihood of stricter lockdowns in the EU. However, since the pair has formed a head and shoulders pattern, we should not rule out a drop to 1.2050.
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