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  • EUR/USD bulls are struggling to extend Tuesday’s bounce from 1.10. 
  • The Fed may validate the renewed expectations for a 2020 rate cut.  
  • A close above Tuesday’s high is needed to confirm a bullish reversal pattern. 

EUR/USD buyers are struggling to find follow-through, having successfully defended the psychological support at 1.10 on Tuesday with a bullish hammer candle. 

The pair peeped above Tuesday’s high of 1.1025 in early Asia only to fall back to 1.1015 ahead of the London open.

Fed to keep rates unchanged

The Federal Reserve (Fed) is expected to keep the benchmark interest rates steady for the second month. After all, the course of the American economy has not altered since the previous FOMC meeting on December 10-11 last year, as noted by FXStreet’s Joseph Trevisani.

Even so, the dollar may come under pressure, as the policymakers may refrain from pushing back against the slightly increased probability of a rate cut priced-into 2020, courtesy of increasing fears about the economic impact of the new coronavirus.

In that case, EUR/USD may confirm a bullish reversal pattern with a close above 1.1025.

The pair will likely drop below 1.10 in Europe if the forward-looking German Gfk Consumer Confidence Survey (Feb) prints below the estimate of 9.6. The data is scheduled for release at 07:00 GMT. The German Import Price Index will also hit the wires at 7:00 GMT. 

Technical levels