EUR/USD Price Ascends, Capped by 1.1755 Ahead of FOMC

• The EUR/USD price remains sidelined on Wednesday as the general market mood leans sideways ahead of the FOMC.
• The EUR/USD looks to reverse four consecutive losing sessions on Wednesday and continues to move away from recent monthly lows around 1.1700.
• All eyes will be on the Fed’s potential timetable for tapering its bond-purchase program.

The EUR/USD price remains sidelined on Wednesday as the general market mood leans sideways ahead of the FOMC event in the European evening.

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Today’s FOMC report is scheduled for 11:00 a.m. Pacific Time. In the first ten minutes, sharp movement usually occurs in both directions. In this case, day traders should exit their positions before the report is published and wait for at least 10 minutes before starting again. FOMC reports can sometimes spark a huge step that can take days.

So far, the EUR/USD pair has a small inside day today, with the last 2 days also small after closing successive large bearish bars near their lows. This is a surprising bear breakout, and there is usually at least one tiny second leg down. Unfortunately, that second leg is sometimes just a barbell.

The EUR/USD looks to reverse four consecutive losing sessions on Wednesday and continues to move away from recent monthly lows around 1.1700.

A fading concern about Evergrande seems to have given market participants some room to play with the risk mix in the past few hours, though market participants appear wary of the FOMC.

It’s largely ruled out that the Fed will act later on Wednesday, but all eyes will be on the Fed’s potential timetable for tapering its bond-purchase program. The Fed will also publish a revision to the “dot plot”.

If today’s sell-off reversed on the upside, it would create a micro-double bottom with Monday’s low. Today’s high will be the signal bar to buy if it closes near it. The bear surprise may have been nothing more than a bear trap and another test of investors’ bottom of the annual trading range.

A price reversal to the upside would involve a higher low and a reversal of the trend. The chances of a trend reversal being caused by a large reversal set up with a good signal bar are 40%. Approximately 60% of the time, this leads to a continuation of a new sell-off.

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EUR/USD price technical analysis: The calm before the storm

The EUR/USD price managed to break above the 20-period SMA on the 4-hour chart. The average daily range is still 62%. It shows the calm before the storm. The volume is encouraging for the bulls. However, staying above the 20-period SMA and 1.1755 resistance may help the bulls.

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