EURUSD holds above 1.1650 ahead of Fed meeting

EURUSD edged higher on Monday, trading near 1.1650 as it recovered from a two-day slide last week. The move comes ahead of a highly anticipated Fed rate cut this week, which has weighed on the dollar, while hawkish remarks from an ECB board member continues to lend support to the euro.

That said, for now the pair remains confined within the 1.1630-1.1680 range, with investors cautious and unlikely to place any decisive positions before Wednesday’s Fed policy announcement. The technical indicators confirm this wait-and-see stance, with the RSI holding above the 50 neutral level, and the MACD positioned above both the zero line and its red signal line, though momentum remains limited.

At the same time, EURUSD continues to build on its rebound from 1.1490 in late October, maintaining gains above the 20- and 50-day simple moving averages (SMAs). As long as the pair stays above the short-term downtrend line drawn from mid-September, breached to the upside late last month, the upside recovery potential remains intact.

Should it resume its upward momentum, initial resistance stands at the seven-week high near 1.1680, followed by the October 17 peak at 1.1730. Beyond that, the next barrier is in the 1.1780-1.1820 region, last tested in September.

To the downside, immediate support lies at 1.1630, with the 50- and 20-day SMAs clustered just below in the 1.1600-1.1590 zone. A break lower could trigger a bearish move toward the lower boundary of the broader 1.1540-1.1730 range, intermittently intact since June, at 1.1540, and then 1.1490. Further losses may bring the 200-day SMA at 1.1477 into play, which converges with the downtrend line and could reinforce bearish momentum.

To sum up, EURUSD is likely to remain range-bound as traders await the Fed decision. However, a sustained break above 1.1680 could open the door for a move toward 1.1700-1.1800.