At the beginning of the European market on Wednesday (March 19th), after three consecutive days of positive closing, the EUR/USD briefly fell below the 1.0900 mark, clearly giving up the previous day's gains. Previously, the exchange rate reached a high of 1.0954 on Tuesday, the highest level in multiple months. However, as the market digests the latest economic data from the United States and pays close attention to the results of the Federal Reserve policy meeting, the US dollar index has temporarily stabilized, limiting the short-term upward potential of the euro.

Fundamental analysis

This week's focus is on the Federal Reserve's upcoming monetary policy decision. The market generally expects that the Federal Reserve will maintain the current interest rate level unchanged and will also release a new Summary of Economic Expectations (SEP), including a "dot matrix" to guide future interest rate trends. If the Federal Reserve lowers its expectations for US economic growth, the market usually sees this as a potential bearish signal for the US dollar, and the US dollar may face downward pressure in the short term. But if the dot plot suggests that decision-makers only expect one rate cut this year (instead of the previous two), it may boost the strength of the US dollar.

In addition, the wording of Federal Reserve Chairman Powell at the press conference is also crucial. If he emphasizes that the inflation outlook remains uncertain and downplays concerns about slowing economic growth, it may help the US dollar resist further selling pressure. On the contrary, if Powell takes a cautious view of the economic outlook, especially mentioning the potential negative impact of tariff policies in certain areas, the market's preference for the US dollar may cool down, allowing the euro/dollar to regain upward momentum in the short term.

On a macro level, some recent economic data in the United States have shown some resilience, especially the previously released retail sales and employment data that exceeded market expectations, supporting the rebound of the US dollar in the second half of Tuesday. At the same time, the eurozone has not yet released significant new economic data, and there has been no significant fluctuation in market expectations for short-term growth and inflation in the eurozone, leaving the euro lacking further unilateral upward momentum. Overall, prior to the Federal Reserve's decision, market trading sentiment was cautious, with the exchange rate hovering around 1.09.

Technical analyst interpretation:

From the 4-hour chart, the euro/dollar briefly hit a high of 1.0954 before falling back, and currently the price is slightly below 1.0900. In terms of technical indicators,

MA (14) is around 1.0917, and the short-term moving average is not far from the current price;

MA (55) is located at 1.0874 and can still provide some support for the exchange rate;

MA (200) is at 1.0556, which belongs to a longer-term reference moving average and is difficult to directly exert support or resistance effects in the short term.

RSI (14) is currently at around 50 levels, indicating that the euro/dollar is not in an extreme overbought or oversold zone;

ATR (14) is approximately 0.0029, with a relatively mild fluctuation range. If the exchange rate can break through 1.0954 strongly and rise to around 1.1050, it can be regarded as a signal of potential upward trend continuation.

Switch to the daily chart for observation,

Within the rising range of the exchange rate since 1.0177, potential support can be judged by referring to the Fibonacci retracement level: 23.6% retracement level is at 1.0419, 38.2% retracement level is at 1.0571, 50.0% retracement level is at 1.0693, and 61.8% retracement level is at 1.0816; The current daily MA (14) is around 1.0787, MA (55) is around 1.0488, and MA (200) is around 1.0727. If there is a deep retracement in the short term, the above prices are expected to provide layered support for the exchange rate.

RSI (14) is around 67, indicating that daily level bulls still dominate, but there may be short-term correction demand;

TR (14) is about 0.0073, indicating that the overall daily fluctuation space is stable.

If the euro/dollar rebounds upwards and regains 1.0954, the next important resistance may be at the level of 1.1070, which may also attract more attention from programmatic trading strategies such as CTA. Once there are eligible incremental buy orders, it will further consolidate the bullish trend.

Overall, the euro/dollar is still in a bullish trend in the short term, but its short-term actions may weaken. An effective breakthrough above the resistance of 1.0954 still requires more cooperation from the news side. If the market continues to observe the Federal Reserve's policies, the exchange rate may fluctuate within the range.

Future prospects

If the Federal Reserve continues to adopt a wait-and-see approach at this interest rate meeting, while lowering its economic growth expectations and emphasizing peripheral uncertainty, the US dollar may come under pressure, giving the euro/dollar a chance to test the high of 1.0954 again, and even seek an opportunity to move up to the 1.10 level. And once the dot matrix reveals a more hawkish stance, or Powell's speech is relatively optimistic about the economic outlook, the short-term rise of the US dollar may drive a more significant pullback in the euro/dollar. Considering the relatively flat economic fundamentals in the Eurozone recently, without additional positive news, the short-term upward momentum of the Euro may not be sufficient; However, in the medium to long term, if the market's concerns about the subsequent slowdown of the US economy increase, the euro is still expected to usher in a new round of upward trend after falling.