It’s been a rough session for the Greenback as values are down across the majors. The key movers have been the EUR/USD (+0.46%), USD/CHF (-0.60%), and USD/CAD (-0.53%), all trending against the USD. Today’s action is a return to the normalcy of the past 12-months ― stimulus drives stocks up and the Greenback down.

Next week marks the second meeting of the U.S. Federal Reserve (Fed) in 2021. Much is being made about this meeting and many are predicting a shifting tone from Chairman Jerome Powell. A recent uptick in inflation, distribution of vaccines, and lofty stock market valuations have experts thinking 2021 will be the final year of dovish COVID-19 Fed policy. Here is what the CME Fedwatch Index currently projects for 2021’s interest rates:

• There is 0.0% chance of a 25 bps rate hike at next week’s meeting
• A 4.1% chance of a 25 bps rate hike occurring April-June
• A 9.8% chance of a 25bps rate hike occurring September-December

It’s important to note that the odds of a 25bps rate hike from today’s 0.0-0.25% level now stands at 9.8% for the September, November, and December Fed meeting. One month ago, this figure only stood at 2.0% ― this is a major shift in market sentiment. Be on the lookout for rate-hike expectations to rise as the year progresses.

Right now, EUR/USD traders are betting on continued dovish policy. Let’s dig into the daily technicals for this pair and check out a key Fibonacci resistance level.

EUR/USD Challenges 38% Fibby

Thus far, the 38% Retracement of the March/February Range (1.1991) has stood tall. This suggests that a short-term bearish bias is warranted toward the EUR/USD.

Moving into the Friday session, there is one level in this market worth watching:

• Resistance(1): 38% March/February Range, 1.1991

Bottom Line: Going into today’s close, I’ll be shorting the EUR/USD from 1.1980-1.1991. With an initial stop loss at 1.2026, this trade produces 30-40 pips on a rejection of the daily 38% Fibonacci resistance level.