EUR/USD Price Analysis: Tests trendline breakout above 1.1000 ahead of Fed/ECB policy

• EUR/USD has faced a marginal correction around 1.1030 as the USD Index has attempted a recovery.
• The Fed and the ECB are preparing for a fresh interest rate hike cycle to curb sticky inflation.
• EUR/USD has delivered a breakout of the downward-sloping trendline plotted from 1.1063.

The EUR/USD pair has shown a marginal correction after facing fragile barricades around 1.1030 in the early European session. The major currency pair has sensed selling pressure as the US Dollar Index (DXY) has attempted a recovery after dropping to near 101.70.

Sheer volatility is anticipated ahead as the Federal Reserve (Fed) will announce its monetary policy decision on Wednesday. The street is anticipating an interest rate hike by 25 basis points (bps).

Also, the European Central Bank (ECB) will announce its interest rate policy on Thursday. ECB President Christine Lagarde is expected to continue its bumper interest rate hike measure as Eurozone’s inflation is extremely stubborn amid labor shortages.

EUR/USD has delivered a breakout of the downward-sloping trendline plotted from April 27 high at 1.1063. The Euro is showing a mild correction, testing the breakout scenario. Potential resistance is placed at 1.1095 plotted from April 26 high.

Advancing 20-period Exponential Moving Average (EMA) at 1.1007 indicates that the short-term trend is bullish.

The Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which signifies that upside momentum has been activated.

The major currency pair will capture more gains after a decisive move above the intraday high of 1.1030, which will drive it toward the round-level resistance at 1.1100. A breach of the latter will expose the shared currency pair to a fresh 13-month high at 1.1085.

On the flip side, a downside move below April 12 low at 1.0915 will drag the asset toward April 10 low at 1.0837 and April 03 low at 1.0788.

EUR/USD hourly chart