EURUSD Prediction: Hits YTD Highs But Focus On FOMC Minutes Cools Momentum

Summary:
• The EURUSD pair hit a year-to-date high on Wednesday, but investors adopted a cautious approach ahead of FOMC meeting minutes release.

EURUSD traded flat in the afternoon European trading session on Wednesday as investors tamed their appetite for the euro ahead of the release of FOMC meeting minutes. The pair was at 1.1123, down by 0.05 percent as of this writing, having eased downwards from a year-to-date high of 1.1132, during the intraday session. While the FOMC minutes are expected to point to an anticipated interest rate cut in September, investors are divided as to the extent of the cut.

The sentiment surrounding the interest rate decision has seen the euro at +2.1 percent against the dollar in the last month and +0.75 percent YTD.  Furthermore, the EURUSD pair is up by about 1 percent in the last five sessions. The highlight of the week will be the speech by Federal Reserve Chairman Jerome Powell at the Jackson Hole Symposium on Friday, where he is expected to provide hints on the potential rate cut trajectory.

In the intervening period, however, EURUSD could get impetus from multiple US macroeconomic data, key among them being the Initial Jobless Claims figures, Existing Home Sales numbers and August PMI figures from both the US and the Eurozone.

EURUSD momentum

The momentum indicators on EURUSD signal that the buyers are still in control of the market. First, the pair still trades above the middle Bollinger Band, which corresponds to 1.1107 as of this writing. Secondly, the Money Flow Index (MFI) reading is at 84, signaling a strong positive money flow. That said, the level also denotes that the pair is in the overbought territory, which could see a decline in the near-term appetite for the euro.

Near-term support and resistance levels

EURUSD seems likely to head down if resistance persists at 1.1124, in which case the first support could come at 1.1111. However, extended control could enable them to breach that mark and build a stronger downward momentum to test 1.1098.

Alternatively, the upside will prevail upside if the buyers go above 1.1124. With the buyers in control, look for the first resistance at 1.1140. However, they could build a stronger momentum and go above that mark if they extend their control. That could possibly see them encounter the second resistance at 1.1150.