31 pip trading range for the day is now 61 pips.

The EURUSD has moved higher in the early NY trading but is already back down. It had to do something. The day started with only a 31 pip trading range. It is no nearly double at 61 pips, but that was it. The price is already back off to where it began.

The pairs non trending characteristic are well documented by now. Yesterday's range was 55 pips. Today's 61 so far. The range for the month is 274 pips. That would make it the lowest range going back to November 2014 when it was 267. In 2014 there was a month with a range of 194 pips (the World Cup was getting started during that month plus banks were under the microscope as a result of fixing scandals - sapping liquidity).

Looking at the hourly chart, the price consolidated above and below the 200 hour MA today and also above the 50% of the years trading range at 1.08469. It ticked above the day's earlier high and that was the nudge to the upside and the next 30 pips. The rotation back lower suggests it was just a liquidity thing.

The price can trade anywhere as traders position for the statement. So what technical levels are of interest through the FOMC decision/statement?

ON a dovish statement (March likely off the table) or short covering rally "just because" (see green tags in the chart above):

  1. 1.0921. Looking at the hourly chart, last Friday the price peaked twice against that level. That is good enough for me in this non-trending market to earmark that as a target
  2. 1.0939-457. Going back to December 28, the pair used this area as a ceiling. Yes there have been 3 separate moves above this level. When the break failed, the price fell. Get and STAY above this level will be eyed today (and going forward)
  3. 1.0984/85. The high for 2016 AND the 100 day MA. To get to this level would imply a range of above 134 pips for the day. The average range for a day is 97 pips. So there should be some sellers looking to trade the rally and correction. Putting it another way...sellers against that level have limited risk

Those are the main steps to the upside today.

Can the Fed be more hawkish? Is ALL meetings are live overtones helpful to the dollar (EURUSD moves lower)? Yes. Just the fact the EURUSD was at 1.0788 two days ago, is evidence of the potential.

So what levels are of interest technically on the downside and why (see red tags in the chart above)?

  1. 1.08718. 200 hour MA (green line in the chart above)
  2. 1.0840-469. 100 hour MA (blue line in the chart above) and 50% retracement
  3. 1.0788-1.0802. If you were to go back to the ECB decision day back on Dec 3rd (remember they did not increase QE that day but cut rates). That was the day the EURUSD traded in a 466 pip range. Anyway, the 1.0788 level was of importance (it was the low correction price after the initial surge). It also subsequently happens to be the 50% of the move up from that day. The 1.0802 level was a swing low on Dec 17 and again on Jan 8 this year. On Jan 13, the low got down to 1.0804 and bounced. Yes, last week, the price fell below on ECB decision volatility but buyers snapped the price back higher. ON Friday and on Monday this week, the low stalled near the 1.0788 level. A move to this level would imply a 123 pip trading range for the day (assuming the high is in place).

On a big EVENT day, there is increased risk from the EVENT itself and from increased LIQUIDITY risk. That is in addition to the MARKET risk from the supply and demand flows from buyers and sellers. The MARKET risk can be managed by understanding the key levels and why. THat is the purpose of the stuff above. The EVENT and LIQUIDITY is a wildcard. Does the Fed say this or does the Fed say that? Do they imply 4 more tightenings? Does the market believe them or not? How about LIQUIDITY? Are traders engaged or do they continue to feel "there is not enough information to make a judgment on 1.04 or 1.10? That risk is not manageable (unless we are the Big Swingin Dude who pushes the market - that ain't me). So trade the levels pre-release (lean against 200 hour MA now?). Square up. See what the brawl at 2:00 does, and what the Fed says and use the levels to define and limit risk in case what you think is not what the market thinks.

PS the stock market will be a wild card. Who knows what they have in mind on Fed?