The US Dollar grew stronger on Tuesday, thus pushing the EUR/USD exchange rate considerably lower.
The pair started to edge south mid-session and consequently plunged 110 pips within a couple of hours, thus breaching all three moving averages and the senior channel along the way. This strong downside momentum was caused by the dismal ZEW survey which showed that German confidence fell to an unexpected low of 5.1 in February.
The first part of the day should mark a move closer to 1.2320 where several important resistance levels are located; however, it is unlikely to be surpassed. The Fed is the main focus today.
An interest hike is seemed to be priced in the market, presumably having a positive impact on the pair. Conversely, improved rate forecasts are likely to pressure the rate lower.