EUR/USD set to rise if the Fed holds off from any tightening move

EUR/USD has been drifting lower as the dollar gains ahead of the Federal Reserve's decision. Euro is well-positioned for the Fed as better prospects for the old continent make it a contender to gain significant ground, Yohay Elam, an Analyst at FXStreet, reports.

Observing the charts also provides an upbeat picture

“Jerome Powell, Chair of the Federal Reserve, may use the opportunity to pre-announce that the bank would lay down a plan for tapering its bond-buying scheme in June. That is when the Fed publishes new economic forecasts. Signaling a reduction in the current $120 billion/month in dollar printing would cause the greenback to jump. However, such an indication is far from guaranteed, and if he sticks to the script – inflation is transitory, still slack in the labor market – the US currency could suffer a fresh sell-off.” 

“Europe has finally picked up speed in its vaccination campaign and is also benefiting from falling COVID-19 cases. After Italy and France began easing restrictions, Spain will reportedly return to accepting British tourists in June.”

“Euro/dollar continues benefiting from upside momentum on the four-hour chart and is holding above the 50, 100 and 200 Simple Moving Averages. The Relative Strength Index is balanced, far from overbought conditions.”

“Initial resistance awaits at 1.2095, the daily high, and that is followed by April's peak of 1.2117. Support is at the daily low of 1.2060, followed by the round 1.20 level.”