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  • EUR/USD’s weekly chart shows signs of indecision in the market. 
  • Last week’s high and low are key levels to watch out for in the short-term. 
  • The pair is likely to see dull action ahead of the Fed’s rate decision. 

EUR/USD lacks a clear directional bias and trades close to Friday’s close of 1.1844. 

Last week, the pair witnessed two-way business and closed on a flat note, forming a classic Doji candle, an indecision sign in the market place. In other words, both bulls and the bears refused to lead the price action. 

The immediate bias will remain neutral as long as the pair is trapped in the last week’s range of 1.1753-1.1918. 

Analysts at Goldman Sachs believe EUR/USD is in a good position to benefit from a continued sell-off in the greenback. The dollar index, which tracks the greenback’s value against majors, has declined by 10% over the past six months. According to the investment bank, the currency pair’s fair value is 1.30. 

However, the pair may continue to trade in the range of 1.1753-1.1918 ahead of the Federal Reserve’s rate decision due this Wednesday. Last month, the central bank’s chairman Jerome Powell introduced average inflation targeting, as expected. This week’s policy statement is likely to reiterate the bank’s willingness to allow inflation to run hot for some time before raising interest rates. 

As for Monday, the focus will be on the Eurozone Industrial Production for July, scheduled for release at 09:00 GMT. The data is expected to show the factory output rebounded by 10% month-on-month in July, following June’s 9.1% rise. An above-forecast reading could lift EUR/USD to 1.1875 (Friday’s high). 

The positive news on the coronavirus vaccine front and the uptick in the S&P 500 futures also favor the upside in EUR/USD.

  • Also read: EUR/USD Price Analysis: Weekly Doji suggests indecision

Technical levels