Greenback Slides Ahead of FED Meeting

The US Flash Manufacturing PMI for April was released on friday, with the reading of 50.8, the lowest level since 2009. The current level reflected the weakest overall business conditions for over six-and-a-half years.
According to a report the Commerce Department published today, new home sales in the US fell for three straight months, down 1.5% on a yearly basis, standing at 510,000, lower than the expected gain of 520,000 for the period.
Tomorrow, The FED is scheduled to begin a two-day meeting on monetary policy. Most officials seem to be maintaining a dovish stance. Economists suppose that the rate hikes may not be possible until the next meeting in June 2016 at the earliest. The central bank is thus expected to keep the interest rate at 0.25%. In response to this expectation, the greenback is turning lower. The dollar index opened this week with a small gap and is now trading at 94.80, down 0.25% from the last close.
On Monday, data from euro zone indicated that the EU economy in on track to recover. The Belgian Business Climate data reported today showed that the production capacity utilisation rate (seasonally adjusted) was at 79.4% in April, compared with the reading of 79.5% in January.

EURUSD H1

Fig. EURUSD H1 Technical Chart

After testing the support of 1.12147, EURUSD is striving up and just broke the 23.6% level of the Fibonacci retracement. The Stochastics chart shows that the price is struggling and preparing to escape from overbought territory. The euro is expected to rise against the greenback, leading the pair to hit the 38.2% level of Fibonacci retracement, and may then pull back.

Trade suggestion

Buy at 1.12715, Stop loss at 1.22645, Take profit at 1.12815

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