The FOMC decision is behind us, the ECB's turn in a few hours. The new FED key interest rate is now 4.5% (50 bp hike) and Powell made clear that this level is not going down anytime soon. Expectations for the ECB this European afternoon are also for a 50 basis point hike. This corresponds to a key interest rate of 2.5% (EDIT: In an earlier version I accidentally wrote 2.0%). Given the inflation in the euro area, this interest rate is still a joke. In this respect, I am also skeptical about the euro's recent recovery.
Yes, the euro is clearly trading above its 200 dma (1.0347) and the big 1.0500 treshold. From a technical perspective you may think about looking for longs above the 1.0500/81 support zone on the daily chart. On the weekly chart, however, the 50 ema (1.0513) must hold or the amazing rally since the late September low (0.9536) is in danger of being over.
(daily)
(weekly)
We all know Ms Lagarde so the chances of an upside surprise this afternoon should be slim. If, contrary to expectations, a higher rate hike is announced (which would be the right thing to do!), the euro rally could of course pick up speed again. But that is not my scenario. So I would try to fade spikes up to 1.0800 given a priced in 50 basis point hike.*
Ultimately, trends may intensify towards the end of the year. In this respect, I advise against standing against emerging trends. It's usually not worth it. We still have a full trading week ahead of us, but it's better used to close the books. What we didn't earn in the previous eleven and a half months, we won't make up for in the last few trading days. That may sound a bit flat, but unfortunately it has already had a negative effect on my account in the past.
Good luck,
Sebbo
(*reminder: my content is intended to be used and must be used for informational purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances.)