Euro awaits key Fed meeting

The EUR/USD pair recovers from the recent losses and trades near 1.0675 during the early European trading hours on Monday. The upside of the major seems limited as investors await the Federal Reserve (Fed) interest rate decision on Wednesday.

The key US data indicated healthy economic conditions over the last week, which could support one more rate hike by the end of 2023. However, markets have priced in that the Fed would skip hiking rates in September, while odds for a 25 basis point (bps) hike at the November meeting decline to 27%, according to the CME Fedwatch tool.

According to the four-hour chart, the EUR/USD pair holds below the 50- and 100-day Exponential Moving Averages (EMAs), implying the path of least resistance for the EUR/USD is to the downside. Adding to this, the Relative Strength Index (RSI) remains in the bearish territory below 50, supporting EUR/USD sellers for now.

The immediate resistance level for EUR/USD appears at 1.0712 (the 50-hour EMA). Further north, the pair will challenge the next hurdle at 1.0755 (the 100-hour EMA). Any meaningful follow-through buying beyond the latter could pave the way to the next barrier near the upper boundary of the Bollinger Band at 1.0768 en route to a psychological round mark at 1.0800.

On the downside, the key support level to watch is 1.0610, representing the lower limit of the Bollinger Band. The additional downside stop is seen at 1.0538 (a low of February 27), followed by 1.0515 (a low of March 15).