EURUSD is trading sideways ahead of FOMC and the Euto is hovering just above 1.1755 supported by a trend line stretching from Sept 2020. The technical picture looks rather bearish. If 1.1755 breaks, this opens the way to the daily support level @1.17 and further to 1.16. However, there is nothing huge expected from the FED today as they might reiterate that "the inflation is transitory".
I think all forces look balanced here at the moment and we need more evidence that the US economy continues to recover gradually even if the peak is behind. In most of the economic recessions, the US was the 1st country to slash interest rates and then the first to start hiking them. As the pace of the economic recovery is higher in the US than in the rest of the world, "the dollar smile" scenario can be supportive for the USD. But right now... we need more evidence and an external catalyst for a higher FX market volatility.
I think all forces look balanced here at the moment and we need more evidence that the US economy continues to recover gradually even if the peak is behind. In most of the economic recessions, the US was the 1st country to slash interest rates and then the first to start hiking them. As the pace of the economic recovery is higher in the US than in the rest of the world, "the dollar smile" scenario can be supportive for the USD. But right now... we need more evidence and an external catalyst for a higher FX market volatility.