EUR/USD turns flat around 200-DMA, focus remains on Fed decision

The EUR/USD pair erased early losses to session low at 1.1123 and has now turned flat to currently trade around 200-day SMA near 1.1150 region.

After an initial upsurge following BOJ announcement, the greenback lost its upside momentum and weakened across the board, helping the EUR/USD major to recover the lost ground. The pair, however, lacked a follow through buying interest and seems to consolidate after yesterday's rejection from above 100-day SMA resistance. 

Central bank policy announcement would remain the key driver for the FX market on Wednesday as investors now look forward to the one of the biggest market moving events, Fed monetary policy decision. With no move expected from the central bank, market participants would keenly scrutinize the accompanying statement and economic projections in order to determine the timing of next Fed rate-hike action and hence, is likely to trigger a fresh bout of volatility in financial markets.

Technical levels to watch

On a sustained move above session high resistance near 1.1160, the pair is likely to head back towards 100-day SMA resistance near 1.1195-1.1200 region. Meanwhile on the downside, renewed weakness below 1.1135-30 area might now drag the pair immediately towards 1.1110-1.1100 support zone below which a fresh leg of weakness might continue dragging the pair lower in the near-term.