EUR/USD: fresh highs on 1.17 handle not confirmed by RSI ahead of FOMC

Currently, EUR/USD is trading at 1.1633, down -0.12% on the day, having posted a daily high at 1.1656 and low at 1.1613.

EUR/USD is consolidated between 1.1612 and 1.1712, a fresh YTD high, while the markets await the FOMC meeting's outcome. The meeting is not a live meeting in the respect that there is zero chance of the Fed making any changes to the status quo, although the statement will draw some attention and matters around their inflation target and balance sheet will be what markets will attend to. 

Dollar View: Discipline or Stubbornness - BBH

"Speculative interest will probably focus on comments related to reducing the Fed's $4.5 trillion balance sheet and if there's any clear date or scheduled on how they will proceed on the matter, but also on how hawkish/dovish the statement is," Valeria Bednarik, chief analyst at FXStreet suggested, adding, "the problem, however, if the market will buy a hawkish stance, considering data has been tepid, to say the least. Unless inflation in the US changes course and accelerates higher, there's a bumpy road ahead for the greenback, regardless what the Fed may or may not say, and that won't happen today, nor tomorrow."

Meanwhile, with respect to the ECB across the pond, at 1.4%, wage growth is not where Draghi wants it, analysts at ING Bank argued. "Broader unemployment measures indicate the slack in the market is still very significant in the Eurozone, and that’s keeping a lid on pay rises. There are also structural factors, like weak productivity growth, globalisation and digitalization; they’re adding downward pressure too. This means the ECB is still some way off from tightening policy, beyond the tapering of quantitative easing," explained the analysts at ING.

EUR/USD levels

The new high of 1.1712 has not been confirmed by the daily RSI and the market has reached major medium term resistance at 1.1713/36 the August 2015 high and long term Fibo, according to analysts at Commerzbank. "There we would look for signs of profit taking. The 200-week ma is also found in this vicinity at 1.1797," they added.