The EUR/USD pair is near the August high of 1.1966 and might break out from the current range as the RSI nears the overbought territory.
After the FOMC-minutes shakeout in the EUR/USD, the pair has carved out a series of higher highs-and-lows. The RSI is now moving up to overbought territory after the Fiber showed a downward trend in August.
As the FOMC is set to meet for the interest rate decision on September 16, and the markets expect the current dovishness to continue without a change, EUR/USD RSI might reach extreme reading as it was in July.
The current market trends might continue as the central bank plans to achieve inflation, which averages two Percent over time.
The recent remarks by the Fed Chairman indicate a less chance to roll-back the emergency measures. The FOMC has discussed an outcome-based approach versus calendar-based forward guidance for monetary policy. The non-conventional Fed measures might persist well-beyond the November elections as the central bank recognizes the challenges towards reviving economic growth even after pushing the interest rates near all-time low levels.
At the same time, the ECB is in a less dovish mood compared to the Fed. Its board member Isabel Schnabel said, “There is no reason to adjust the monetary policy stance.” The argument is that the Euro area is operating near the baseline scenario and is on course for a strong rebound in the third quarter. The next ECB meeting is on September 10.
The ECB President Christine Lagarde and team considers 1.350 trillion euros pandemic emergency purchase program as a ceiling than a target. The current stance taken by the ECB might help the euro to continue outperforming the dollar.