This week market should exercise caution about two potentially market-moving events, the highly anticipated Federal Open Market Committee (FOMC) meeting on Wednesday, with speculation mounting about a possible earlier-than-expected policy shift from the central bank and the September options expiration on Friday.
Last week the pair moved sideways between 1.2979 and 1.2859. Bulls have a slight edge in the short-term although 1.2987 is expect to provide heavy selling opportunities for scalpers and day traders , at least until Wednesday when we have a heavy USD news day. A sustained break above 1.2987 would change the short-term charts to bullish.
Expecting upward move to daily resistance at 1.3101 on a break above a key level at 1.2987 (scenario 1) or a bounce to the downside of the 1.2987 level could push prices to 2013 July low at 1.2868 (scenario 2).