Market takes liberty at the bottom and top today
The EURUSD low today extended below a support level at the 1.0560 level by 10 pips (low came in at 1.0550). The 1.0560 level represents the swing low from April 2003. The price has used the level as a floor and ceiling over the last few days of trading.
On the topside, the 1.0634 – 44 has a number of highs also over the last few days of trading. The high today extended to a high of 1.0650 - just above that extreme.
So traders took a little liberty at the top and at the bottom in trading today. In the process, a range of 100 pips has been established and the price currently trades near the center of that range (at 1.0600).
Outside that range, is the 1.0500 level below and on the topside, the 200 hour MA (green line in the chart above) at the 1.0708 currently (and moving lower). By tomorrow's FOMC, that MA will be lower by about 25 pips given the current decay from the slope of the line (around 1.0685 area). The price has not moved traded above the 200 hour MA since February 26th.
Barring a surprise move between now and the FOMC, the 100 pips inside levels, and the 1.0500 level below, and 1.0685 level above (200 hour MA), will be the targets on a decision.
If the Fed strikes "patience", that should have the pair looking toward a break of the 1.0500 level. If they keep "patience" in, they I will be looking for a break of the 200 hour MA to lead to further corrective momentum.
My lean is that the Fed strikes patience from the language and chooses to ignore the negative from the weather. That should keep the dollar supported. Risk is elevated.