Central bankers have been pulling tricks out of their hats and even their full armor as the ECB, in desperate attempts to boost local growth and escape from deflation, not succeeding much to their despair, considering the ongoing global economic slowdown. 

The US Federal Reserve, however, left the easing path long ago and took the opposite direction, rising rates for the first time in over a decade last December, and pledged to a steady continuation of the tightening path during this 2016, suggesting 3 to 4 rate hikes for this 2016. Hopes of such moves diminished with every release of poor macroeconomic figures showing that between December and February the economic recovery somehow stalled.

Watch: Trade Federal Reserve interest rate decision with FXStreet


And the FED meets again. The US Central Bank will release the updated projections of its funds target rate, alongside with the latest decision, and overall, the market is expecting them to signal 2 to 3 hikes this year, down from previous 4. The FOMC will also offer its latest economic projections, but this last data won't be relevant, given that policy makers have overestimated the economic developments in the country and the market knows it. Rates are expected to remain unchanged between 0.25%-0.50%. 

The big question now is whether they will leave doors open for a June rate hike, or if they will keep them closed until September. The first scenario can see the dollar surging against its weaker rivals such as the EUR and the GBP, but it will be hardly enough to affect the JPY or the AUD. The second big question will be if forthcoming data can support further tightening. 

Investors will also pay attention to Yellen's statement, and trade accordingly. The FOMC is largely expected to reiterate that upcoming decisions will remain data-dependent, while assessing the effects over the local economy of the ongoing global slowdown. But for the majority of analysts, a hawkish stance is expected, given that inflation seems to be finally picking up as the core PCE price index rose from 1.4% to 1.7% on an annual basis.  

EUR/USD technical outlook

d

The EUR/USD pair holds to most of its post-ECB gains, consolidating around the 1.1100 level ever since the dust settled, with little directional strength in the bigger picture, and despite ongoing dollar's weakness and the failed attempts of weakening the EUR from Mario Draghi. 

Nevertheless, the technical picture favors the upside, as the pair is back trading above its 100 and 200 DMAs, with the longest now around the 1.1000 figure, adding its strength to the psychological support. But it's also notable that the moving averages have been pretty much horizontal for almost two months, in line with the ongoing uncertainty surrounding the pair. 

In the same chart, the technical indicators have recovered bullish territory, but lack enough strength to confirm a stronger rally. Should the FED disappoint, the pair can return to last week highs above 1.1200, and beyond, towards the 1.1240/50 region, a strong static resistance level. Gains beyond this last are unlikely for this Wednesday, but some follow through beyond it could signal a steady advance during the forthcoming sessions towards the 1.1460 region. The immediate support comes at 1.1065, the 38.2% retracement of the latest bullish run, but it will take a downward acceleration below the mentioned 1.1000 figure to see the pair getting back to its latest range of 1.0800/1.1000. 

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