EUR/USD little changed, close to three-week highs before the Federal Reserve announces its decision

The euro was slightly changed against the US dollar on Wednesday and was trading in proximity to three-week highs ahead of Federal Reserves decision on policy.

EUR/USD reached a session high at 1.3363 at 5:10 GMT, after which consolidation followed at 1.3361, ticking up a mere 0.03% for the day. Support for the pair was expected at September 17th low, 1.3324, while resistance was to be encountered at September 16th high and also a three-week high, 1.3384.

Market players were expecting the outcome of Feds two-day policy meeting. The Federal Open Market Committee (FOMC) might decrease Treasury purchases to 40 billion USD and continue to buy 40 billion USD of mortgage backed securities, according to the median estimates of experts participated in a survey by Bloomberg. “The absolute amount of tapering will be the key,” said Greg Gibbs, a senior currency strategist at Royal Bank of Scotland Group Plc in Singapore, cited by the same media. “I anticipate that we’ll see the dollar strengthen in the event that we get at least $10 billion worth of tapering. If we were to get less than $10 billion, that would certainly throw some doubt over whether the Fed is seriously going to persist with tapering and end their purchases, and we’ll see the dollar weaken on that.”

Federal Reserve policymakers have pledged to maintain the benchmark interest rate at levels close to zero at least as long as unemployment rate exceeds 6.5% and the inflation outlook is no more than 2.5%. The US central bank will also release its economic forecasts for 2016 today.

Later on trading Wednesday the United States was to publish data also on building permits and housing starts.

Meanwhile, the euro received certain support yesterday after an optimistic series of ZEW indicators out of Germany and the Euro zone. German index of economic sentiment increased by 7.6 points to reach a value of 49.6 in September, the highest point since April 2010 and significantly exceeding preliminary estimates of a reading of 45.0. ZEW economic sentiment indicator for the Euro zone as a whole rose by 14.6 points to reach 58.6 in September.

Additionally, Euro region’s trade balance recorded a larger surplus in July, at the amount of 18.2 billion EUR, as in July 2012 the surplus figure was 13.9 billion EUR.

Elsewhere, the euro was slightly lower against the British pound, with EUR/GBP cross down by 0.08% on a daily basis to trade at 0.8394 at 7:09 GMT. EUR/JPY pair, on the other hand, was gaining 0.09% to trade at 132.56 at 7:11 GMT. US dollar has lost 0.5% over the past week, the worst performing currency among the 10 developed-nation currencies, tracked by Bloomberg Correlation-Weighted Indexes. The euro has erased 0.2% during the same period, while the Japanese yen has increased by 0.2%.