EUR/USD is going into a consolidation phase at around 1.0450. As economists at Commerzbank note, the pair heads toward Fed meeting without much sense of direction.

In limbo

“EUR/USD remains susceptible to sudden changes in sentiment and as a result, it seems unlikely that on a day with little data like today a clear direction will emerge. It seems likely that the pair will remain in limbo as was the case over the past few days.”

“The stronger the data turns out to be until the FOMC meeting in a week’s time (producer prices and inflation expectations on Friday as well as consumer prices next Tuesday) the greater the risk that the FX market might have to reconsider this view once again. That might provide a dampener for EUR/USD over the course of the week. However, FX traders will no doubt wait for the Fed’s decision and new projections before making any fundamental adjustments to their expectations.”