The direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to 1.1797.The Euro is trading lower on Wednesday against the U.S. Dollar, but the early inside move suggests investor indecision and impending volatility with investors refraining from placing major bets ahead of the outcome of a U.S. Federal Reserve meeting.

The Fed is due to release its monetary policy statement at 18:00 GMT, followed shortly by a press conference by Federal Reserve Chairman Jerome Powell. Investors are hoping the Federal Open Market Committee (FOMC) provides clues as to the timing of tapering its current bond stimulus purchases amid surging U.S. inflation.At 12:22 GMT, the EUR/USD is trading 1.1804, down 0.0011 or -0.09%.

Ahead of the Fed, the market is split over whether the Fed will make any major policy shifts at this meeting. Some believe policymakers may be willing to wait until after the next U.S. Non-Farm Payrolls report (August 6) and the July CPI report due to be released on August 11. If this is the case, then look for the Fed to make the announcement at the central bankers’ summit at Jackson Hole, Wyoming in mid-August.

The ECB last Thursday struck a dovish tone with investors, driving the Euro lower before profit-taking and position-squaring helped put in a short-term bottom. Some traders feel that a hawkish Fed could trigger a resumption of the selling pressure on the single-currency.Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart, however, momentum has shifted to the upside. A trade through 1.1881 will change the main trend to up, while a move through 1.1752 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A trade through 1.1755 will change the minor trend to down. Taking out 1.1841 will indicate the buying is getting stronger with the minor top at 1.1851 the next likely target.

The minor range is 1.1752 to 1.1841. Its 50% level or pivot at 1.1797 is currently being tested.

The short-term range is 1.1881 to 1.1752. Its 50% level at 1.1817 helped stop today’s early rally.

The main range is 1.1975 to 1.1752. Its retracement zone at 1.1864 to 1.1890 is the primary upside target and last potential resistance area before the main trend changes to up.Daily Swing Chart Technical Forecast
The direction of the EUR/USD on Wednesday is likely to be determined by trader reaction to 1.1797.

Bearish Scenario
A sustained move under 1.1797 will indicate the presence of sellers. If this move generates enough downside momentum then look for a drive into the minor bottom at 1.1755, followed by the main bottom at 1.1752. If the latter fails as support then look for the selling to possibly extend into thee March 31 main bottom at 1.1704.

Bullish Scenario
A sustained move over 1.1797 will signal the presence of buyers. At this point a labored rally could develop with the first two upside targets 1.1817 and 1.1841. Taking out the later should trigger a further rally into 1.1851 and 1.1864. Sellers are likely to come in again at this point, defending the main top at 1.1881.

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