Fed meeting may trigger EURUSD pullback to 1.083 level

After a slight pullback, the EURUSD currency pair approached the level of 1.093, which matches the November high. It is quite noticeable that after a strong start in early March, the euro's strengthening against the dollar has slowed down significantly. At the same time, the quotes have not had a full-scale correction for almost a month, which would help to eliminate the technical overbought condition. The nearest events are just able to send EURUSD back to the level of 1.083.

Traders are waiting for the results of today's Fed meeting. There is almost a 100% probability that the current level of interest rates will be maintained, but Jerome Powell's speech is much less clear. According to Bloomberg analysts, even against the background of worsening economic statistics, the head of the US regulator will be cautious and will avoid promises of a sudden monetary easing. This scenario is hindered by inflation still exceeding the Fed's target level.

Besides, not all data on the US economy are worse than expected. For example, yesterday's data on industrial production exceeded forecasts. Due to the 25% duties imposed on products from Canada and Mexico, American companies significantly increased vehicle production. The capacity utilisation of plants in February rose to the highest level since last June at 78.2%.

The EURUSD's surge seems a bit excessive against this background. UBS analysts raised their estimate of a fair ratio of EURUSD from 1.06 to 1.08, but still consider the purchase of the European currency at current levels unreasonable. In their opinion, the quotes are likely to pull back to 1.063 in the near future. Even though investors are now transferring their capital from the US to the EU, the imposition of Donald Trump's tariffs could quickly trigger a reverse process.

After a short break, the RSI indicator returned to the overheated state, indicating high risks of EURUSD correction. The short term target of the bears will be the level of 1.083.

Consider the following trading strategy:

Sell EURUSD at the current price. Take profit — 1.083. Stop loss — 1.101.