(MENAFN- Daily Forex)

• The Euro has rallied significantly in the early hours here on Tuesday as it looks like we are trying to break the 1.18 level for a bigger move.
• All things being equal, this is a situation where traders will continue to see a lot of hesitation in this area so we'll have to wait and see if we can truly break to a fresh high which would be closer to the 1.1835 level.
• If we do, you're not out of the woods quite yet because you have the Wednesday interest rate decision that will have a major influence on what happens next.

With that being said, I think you've got a situation where a lot of traders are going to be very cautious, mainly due to the idea that the Federal Reserve announcement, while expected to be a rate cut, may have people worrying about the global economy. We'll just see how nervous they are. If they're a little too nervous, that actually is pro-dollar.

It will have people running to the bond market, which of course takes dollars. We'll just have to wait and see in the short term; it certainly looks like you can't sell this pair. And I really don't know how much clarity you have until the end of the Wednesday session.

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That's the main reason I'm doing the analysis on this pair here, because I know there are a lot of people watching this and it's getting very bullish, but the market already knows there's a rate cut. It's the statement and the reaction to the press conference end statement that you will have to watch. If we do pull back, I don't suggest that you should be selling this pair either. But it would not surprise me at all later this day, on Tuesday, to see this market pull back into the consolidation area we had been in.

EURUSD Chart by TradingView

If we do continue higher, the measured move is for the 1.20 level to be targeted. If we break down the 1.16 level and the 50 day EMA both should be significant support. Again, the market knows the Federal Reserve is going to cut rates, but they sound even mildly hawkish or concerned about the future. That's going to catch a lot of traders on the wrong side of this market.

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