The EURUSD pair logged gains on Tuesday, January 26, closing 0.19% higher at 1.2160. The price action climbed to 1.2176. Risk appetite unexpectedly showed an uptick across the board. There was no news flow driving the key pair higher. Market participants shorted the dollar, brushing aside the following negative events in Europe: Italian Prime Minister Giuseppe Conte tendered his resignation; Germany’s Ifo business climate index on Monday heightened concerns about the potential impact of the pandemic and lockdowns on the country’s economy; Chancellor Angela Merkel said that Germany’s management of the coronavirus pandemic “has slipped out of control” and stricter curbs are needed to prevent a new wave of the disease.

Speculators may opt to sell the greenback ahead of the FOMC meeting and Jerome Powell's press conference on Wednesday. The regulator is not expected to alter its current monetary policy stance or come out with any new economic forecasts. Investors will be waiting for more information on the prospects for the adoption of the Biden administration’s $1.9 trln coronavirus bill to support the US economy.

EURUSD fell sharply to 1.2140 from 1.2176 after reports that the ECB has queried dollar weakness despite a stronger US economy. This was reported by Cristine Lagarde, who went on to say the ECB will monitor the impact on FX exchange rates from the ECB vs. Fed policies. Buyers pared the decline, pushing the price back up to 1.2168.

Today’s macro agenda (GMT+3)

• 12:00 Switzerland: Credit Suisse ZEW expectations (January)
• 16:30 US: durable goods order (December),
• 18:30: EIA weekly petroleum status report
• 22:00 US: FOMC interest rate decision, accompanying statement
• 22:30 FOMC press conference

Current outlook

The euro has been hovering around 1.2159 this morning. The price is near the midpoint of an ascending channel above the balance line and below the resistance line (1.2170). The range of the channel is 88 pips. Today the attention of market participants will be riveted on the FOMC meeting and Jerome Powell's press conference.

Major currencies have been showing choppy performance against the US dollar this morning. Virtually all euro crosses are trading in positive territory. At the upper bound of the channel, the target for buyers is 1.2204. For sellers, the target is at the lower line of the channel at 1.2120. Since yesterday the euro recovered in the absence of news flow, brushing off negativity, it makes sense to refrain from trading until the Fed Chairman speaks, or to stay abreast of developments in order to quickly exit the market before an important event.