The EUR/USD pair closed last Friday with a weak tone. It managed to push below the pre-NFP lows in a sharp reversal of the price action seen the entire week.
With only two trading days ahead of the FOMC Statement and staff projections, the dollar shows some signs of life. While it is premature to say that the EUR/USD has put a top, we do see a possible triple top at the 1.2250 followed by a break of the higher lows series. Hence, a new bearish trend may have already started.
The European Central Bank (ECB) meeting last Thursday failed to provide clarity to the market participants. On the one hand, the central bank said that it is keeping the pace of the PEPP program for the next three months – that is bearish the euro. On the other hand, it upgraded its growth outlook for the Euro area economies – that is bullish the euro. All in all, the ECB delivered a mixed message, and the market reflected the uncertainty.
Bears may want to stay on the short side ahead of the Fed meeting. Any pullback would likely be sold against the previous lower high and targeting a move below the critical 1.20 level.
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