The EUR/USD rally stalled around the 1.1350 level on Wednesday, now trading in the middle of the 1.1300/1.1350 range. Economists at ING are closely watching a break above 1.1380 though they expect the pair to stage a pullback towards the 1.12-1.13 range as investors may be attracted by current levels to build back some dollar longs ahead of the Fed meeting next week.

1.1380 is the level to watch

“Rather than a break above 1.1350, we see more significance in the 1.1380 resistance which was where the 30 November rally found a stop. A break above that level may signal consolidating bullish sentiment, and possibly rising bets on a hawkish turn by the European Central Bank next Thursday.”

“We are more inclined to expect a pullback towards the 1.12/1.13 range in the next few days, as markets may see some attractive levels to enter long-USD positions ahead of the Fed meeting next week.”