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The Fed is going to announce its monetary policy decision later today, and traders believe that it will keep its monetary policy the same. If the Fed decides to adopt a dovishly hawkish tone today, we could see a major turmoil in the market. This is because not many are expecting.

Traders know that not all Fed members are on the same page as the Fed’s Chairman. This is why we have started to see strength in the dollar index for the past few weeks as speculators believe that dot lot is likely to show that there will be an interest rate hike next year. At least some members of the Fed will certainly move their projections of the economy from being dovish to hawkish.

However, if dot pot and the GDP and inflation forecast do not show any element of hawkishness, then we could see the dollar index plunging. This means that the massive sell-off we are experiencing for the EUR/USD for the past few days can quickly change its direction. 

Technically speaking, the EUR/USD pair has rejected the 200-day Simple moving average on the daily time frame, and this means that the bulls do not have strong power to continue to push the pair to the upside.

The next support for the pair is at 1.18 while the resistance is 1.2066

EUR/USD Daily Chart

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