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Forex: EUR/USD capping at 1.3200

FXstreet.com (Barcelona) - The EUR/USD is extending its upside today as investors price in expectations ahead of the FOMC meeting, but the pair has found resistance at the psychological level of 1.3200 during the European morning. Following a profit taking stage down to 1.3190, the market is still attempting to breach above the handle.

TD Securities analysts believe that the minutes of today’s FOMC meeting may be more interesting than the actual outcome, “as the minutes will show that the weaker run of US data has shifted the debate away from the exit of QE”. Today’s statement should also give signs of what is to come: “We expect the assessment of the economic and inflation outlook to be downgraded, reflecting a shifting emphasis relative to March when the prospect of a labor market recovery was beginning to tilt the balance towards tapering. This time around the rising uncertainty about the impact of fiscal austerity on growth and further moderation in core inflationary pressures will likely shift the balance back to an easing bias. And even though we do not expect the dial to go all the way to increasing the size of purchases, the risk of this has increased, albeit one that remains quite low”, wrote analyst Alvin Pontoh.

“Yesterday's break beyond 1.3120 high reinstated the bullish bias and currently the pair is caught in the 1.3120-3200 range. Intraday I favor a slide to 1.3120 support before a tighter test of 1.3200 resistance area which is expected to cap the upside for now”, wrote Deltastock.com analyst Stoyan Mihaylov, adding that only a clear break through 1.3200 will set the focus at 1.3300-3320 hurdle.

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