EURUSD coils below 1.0600 as Fed decision looms, 1.0700 breakout eyed

EURUSD is trading in a tight range near 1.0580, down 0.1% intraday, as markets await Wednesday's Federal Reserve policy decision. The pair has formed a bullish pennant pattern on the daily chart, suggesting potential for an upside breakout if the Fed delivers a dovish surprise. Current positioning shows the pair compressed between support at 1.0540 (200-day MA) and resistance at 1.0620 (descending trendline). Market participants are pricing in a 25 basis point Fed rate cut with 85% probability, but focus remains on forward guidance and dot plot projections. A dovish tilt acknowledging slowing inflation could trigger a surge toward 1.0700 and potentially the mentioned 1.1700 level longer-term. However, French political uncertainty continues to cap euro gains, with government stability concerns weighing on sentiment. Technical momentum indicators remain neutral, awaiting a catalyst for directional conviction.