The Greenback is showing signs of life to open FED week, posting gains across the majors. Today’s big movers are the EUR/USD (-0.25%), USD/CAD (+0.15%), and AUD/USD (-0.15%). Although the Monday action isn’t huge, it looks like forex players may be expecting a modest change of tone from Jerome Powell and the FED.

This week’s key economic event is the FOMC meeting which takes place tomorrow and Wednesday. No policy moves are expected, as the massive bond-buying program and 0.0-0.25% are to remain in place for the immediate future. Earlier this morning, only a few peripheral metrics were scheduled: 

Event                                                                         Actual                Previous

Chicago Fed National Activity Index (Dec.)             0.52                     0.27

Dallas Fed Manufacturing Index (Jan.)                    7.0                         9.7

This group of numbers is contradictory. The Chicago Fed National Activity Index (Dec.) came in well above November’s figure, suggesting that the US economy is picking up. However, the Dallas Fed Manufacturing Index (Jan.) indicates that business is slumping in Texas. All in all, these reports haven’t done much to the Greenback.

The Greenback Comes Out Swinging On FED Week

For the EUR/USD, the action is are firmly bearish to open FED week. Rates have fallen to the 1.2150 area, just above downside weekly support.

Here are the important technical levels to watch for the near future:

• Resistance(1): Spike High, 1.2349
• Support(1): 38% Macro Wave, 1.2064
• Support(2): Weekly SMA, 1.2061

Bottom Line: The convergence of technical indicators is a good thing. That’s what we have on the EUR/USD weekly chart, with the 38% Macro Wave Retracement (1.2064) and Weekly SMA (1.2061) now within five pips.

For the remainder of the week, I’ll have buy orders in the queue from 1.2069. With an initial stop loss at 1.2019, this trade produces 50 pips on a standard 1:1 risk vs reward ratio.