EUR/USD is showing almost no movement in Wednesday trading, as the markets gear up for the FOMC Statement later in the day. In the European session, the pair continues to trade in the mid-1.33 range. Looking at economic releases, there are no Eurozone releases on Wednesday. In the US, today’s highlight is Building Permits. The markets are not expecting much change in the August release.
Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.
EUR/USD Technical
- In the Asian session, EUR/USD showed little movement, touching a high of 1.3364 and consolidating at 1.3361. The pair is unchanged in the European session.
Current range: 1.3325 to 1.3450.
Further levels in both directions:Â 
- Below: 1.3325, 1.3240, 1.3175, 1.31, 1.3050 and 1.30.
- Above: 1.3450, 1.3520, 1.3590 and 1.37.
- 1.3325 continues to provide weak support. 1.3240 is stronger.
- 1.3450 is a strong resistance line.
EUR/USD Fundamentals
- 12:30 US Building Permits. Exp. 0.95M.
- 12:30 US Housing Starts. Exp. 0.93M.
- 14:30 US Crude Oil Inventories. Exp. -1.2M.
- 18:00 US FOMC Economic Projections.
- 18:00 US FOMC Statement.
- 18:00 US Federal Funds Rate. Exp. <0.25%.
- 18:30 US FOMC Press Conference.
* All times are GMT.
For more events and lines, see the Euro to dollar forecast.
EUR/USD Sentiment
- FOMC Statement in Spotlight: This week’s highlight will be the FOMC Statement, which will be released later on Wednesday, after the Federal Reserve winds up a two-day policy meeting. The markets have been speculating about QE tapering for months, and we could see the Fed take action in the upcoming statement. However, there is a stronger likelihood that QE tapering will not begin until later in the year, as US economic releases, particularly employment data, could be stronger. Clearly, Fed chief Ben Bernanke faces a difficult decision. Traders should be prepared for some volatility from EUR/USD once the FOMC Statement is released. Full preview: QE Tapering Preview: 5 Reasons, 6 Scenarios and 7 Potential Currency Reactions
- Summers withdraws from Fed race: US Federal Reserve Bernard Bernanke steps down at the end of January, and the race to replace Bernanke has taken a dramatic twist. Former Treasury Secretary Lawrence Summers was considered the leading contender for the prestigious position. Surprisingly, Summers has withdrawn his nomination, leaving Vice Chairman Janet Yellen as the favored candidate. Yellen is considered dovish and may be hesitant when it comes to QE tapering. The dollar responded to the news of Summers’ withdrawal by losing ground against the major currencies.
- ZEW Economic Sentiment Sparkles: Eurozone and German ZEW Economic Sentiment releases were excellent in August. The German indicator jumped from 42.0 to 49.6 points, surpassing the estimate of 45.3 points. This was the indicator’s best level since April 2010. However, Eurozone ZEW Economic Sentiment stole the show, rising from 44.0 to 58.6 points, a remarkable reading. This crushed the estimate of 47.2 points, and was the highest level recorded since September 2009. These strong releases reflect the view of financial market experts that the German and Eurozone economies are picking up steam.
- US data continues to disappoint: What’s wrong with the US economy? US releases have run into trouble in recent readings. Core CPI posted a weak gain of  0.1% in August, and Empire State Manufacturing Index, an important release, posted another sharp drop in August. The indicator fell from 8.2 points to 6.3 points. This was way off the estimate of 9.2 points. If the US continues to post weak releases, the dollar could lose ground as a result.
