EUR/USD: Bulls need a break above 55-day EMA, focus on Fed

• The 55-day exponential moving average (EMA) is the level to bet for the EUR/USD bulls. 
• Risks surrounding the EUR/USD pair are skewed to the downside, markets seem to have run ahead of themselves while pricing in the Fed's potential dovish turn. 

The EUR/USD pair is up more than 100 pips from last Friday's low of 1.1270, but a bull breakout would be confirmed after the 55-day exponential moving average (EMA) is convincingly scaled.

The EMA line has caught highs on a daily closing basis three times in the last 2.5 months. As a result, it is the level to beat for the bulls.

At press time, EUR/USD is trading at 1.1387 and the 55-day EMA is lined up at 1.1409. A daily close above the EMA line will likely be followed by a sustained rally to 1.1515 (50% Fib R of 1.1815/1.1215) and above.

The bull breakout above 55-day EMA, however, may remain elusive if the Fed once again leaves investors behind the curve with a less-dovish-than-expected forecast of two rate hikes in 2019. Moreover, the markets are currently assigning just 30 percent probability of a single rate hike for the whole of 2019.

EUR/USD, however, could pick up a strong bid if the US central bank drops hints of a rate hike pause in 2019.

EUR/USD Technical Levels