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Early in the European session, EUR/USD is trading around 1.0685 above the 21 SMA and above -1/8 Murray. In the H4 graph, we can see that the euro is trading within the bearish trend channel.
Yesterday during the European session, the Euro tried to break this channel but failed. Since then, EUR/USD is making a technical correction. The dynamic support of the 21 SMA located at 1.0674 could serve as a technical rebound point and this could reach the 1/8 Murray zone located at 1.0805.
In the next few hours during the American session, data on US monetary policy will be published. This news could generate strong volatility in the euro and we could expect a fall towards the -2/8 Murray zone located at 1.0620.
In the event that this scenario occurs, we should expect a technical bounce above 1.0620 which could be seen as an opportunity to buy.
The Fed is expected to keep the interest rate at 5.50%. Chairman Powell's statement is likely to say that further tightening will be necessary if inflation picks up further. A strong and decisive speech could affect the strength of the Euro and it could break below 1.0620 and reach the psychological level of 1.05.
In the event that the Euro consolidates on a 4-hour chart above 1.0715, we could expect this to be considered a break of the downtrend channel and it could reach the 200 EMA located at 1.0805 and could even reach 2/8 Murray located at 1.0864.
Our trading plan for the next few hours is to buy the euro above 1.0674 with targets at 1.0742 and 1.08. In case a pullback occurs towards 1.0620 it could be seen as an opportunity to buy with targets at 1.0803.
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