**Pre-FOMC USD Price Action Setups: Key Levels for EUR/USD, USD/CAD, USD/JPY, and GBP/USD**
*By Matt Weller, FOREX.com*
Ahead of the highly anticipated Federal Open Market Committee (FOMC) meeting, the US dollar finds itself at a critical juncture across multiple major currency pairs. Price action in the days leading up to the meeting may help traders gauge how markets are positioning for the announcement and subsequent press conference. The focus remains on how the Federal Reserve will balance recent macroeconomic data with long-term inflation goals and monetary policy guidance.
This article analyzes the recent performance and technical outlook of four prominent currency pairs versus the US dollar: EUR/USD, USD/CAD, USD/JPY, and GBP/USD. Each pair offers unique insights into market sentiment, economic expectations, and potential opportunities for both short-term and long-term strategies.
Let’s examine each in further detail.
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## 1. EUR/USD: Key Resistance Test Looms
The EUR/USD pair has seen relatively stable trading behavior, yet there are key signs of momentum that traders should watch closely.
### Recent Market Dynamics:
– The pair rebounded from a low near 1.0650, finding support through the middle of May.
– Bullish recovery occurred due to softer-than-expected US economic data, which stirred speculation about a more dovish stance from the Federal Reserve.
### Technical Analysis:
– Price action remains capped near the 1.0800 psychological level.
– A major horizontal resistance zone exists around 1.0800–1.0820. This area has rejected the pair multiple times since early May.
– The 50-day moving average lies close to 1.0780, reinforcing the technical ceiling.
### Bullish Scenario:
– A convincing breakout above 1.0820 could indicate further upside potential.
– Immediate target: 1.0900 resistance zone.
– If momentum continues, a move toward the 200-day moving average (currently around 1.0950) may come into play.
### Bearish Scenario:
– Failure to break above 1.0800 could trigger renewed selling pressure.
– A retreat back toward 1.0650 is possible if the dollar strengthens post-FOMC.
### Fundamental Considerations:
– The euro remains under pressure from cautious ECB guidance.
– Divergence in economic growth trajectories between the Eurozone and the US continues to favor the dollar over the medium term.
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## 2. USD/CAD: Range-Bound with Oil and Rate Expectations in Focus
The Canadian dollar has been trading in tandem with key commodities, especially crude oil, while also tracking expectations on future Bank of Canada (BoC) policy shifts.
### Recent Market Behavior:
– USD/CAD has been confined within a consolidation range between 1.3600 and 1.3750.
– The price action reflects a balance between softer US economic indicators and fluctuating crude oil prices.
### Technical Outlook:
– Resistance is clearly defined near 1.3750 – a triple top formation has emerged.
– Support is anchored at 1.3600, creating a well-defined range for traders.
– Momentum indicators such as RSI and MACD suggest indecision.
### Bullish Scenario:
– A breakout above 1.3750 could open the door for a rally toward the 1.3860 area.
– Above that, 1.3900 remains the next key resistance.
### Bearish Scenario:
– A break below 1.3600 could invite selling pressure targeting 1.3500.
– Below 1.3500 lies a critical swing low at 1.3450 from early April.
### Key Drivers:
– Crude oil prices remain a pivotal variable for CAD strength.
– The BoC’s monetary policy signals are more dovish relative to the Fed, which could support USD/CAD strength over time.
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## 3. USD/JPY: Record Highs
Explore this further here: USD/JPY trading.