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EUR/USD is seen at risk to a test of its 55-day average at 1.2080 – potentially price/retracement support at 1.2053/51 – but with this ideally holding, economists at Credit Suisse report.

Support from the 55-day average at 1.2080 to try and hold  

“The immediate risk stays seen mildly lower going into the Fed for a test of the rising 55-day average, now at 1.2080. With the mid-May low and 38.2% retracement of the rally from late March not far below at 1.2053/51 our bias remains to then look for a floor here post the Fed. A break though would expose the 200 – day average and May low at 1.1996/86.”  

“Failure to hold the 1.1996/86 support on a closing basis would reinforce the broader sideways range that has been in place all year, opening the door to further weakness to 1.1942 next, then 1.1928/18.”  

“Above 1.2144/54 is needed to ease the immediate downside bias for a move back to 1.2196.”  

“Beyond 1.2218/19 remains needed to reassert the uptrend for a move back to the 1.2255/67 highs /downtrend from January. This remains seen as the barrier to a move to the top of the year’s range at 1.2319/50.”