What do Fed and ECB decisions a day apart mean for the Euro below 1.12?

• EUR/USD closes at its low, marking its first finish below 1.1200 since 14 October.
• EUR/USD surrenders its advance within 11 bars despite Ifo expectations climbing to 91.6.
• Rates are expected to remain unchanged at Thursday's ECB decision, which follows the Fed's a day earlier.

Dollar demand ahead of the Federal Open Market Committee (FOMC) meeting, which concludes on Wednesday, pushed EUR/USD to its weakest level since 15 October. The pair closed at that low, recording its first finish below 1.1200 since 14 October. Earlier on Monday, Germany's Ifo survey had exceeded forecasts, but EUR/USD had slipped below its pre-release level by the 11th five-minute bar.

Ahead of the Fed meeting, the US two-year yield climbed to around 4.71%. At 3.75%-4.00%, the Fed's rate range already stands well above the European Central Bank (ECB) deposit rate of 2.50%. Futures assign a probability of nearly 80% to a December Fed hike, a move that would extend the rate differential in the Dollar's favour.

Expectations in the Ifo survey improved from 90.4 to 91.6, helping lift the business climate reading to 90.2 versus a forecast of 89.8. The current assessment, however, slipped from 89.5 to 88.8. This stronger German outlook reinforces the case for an ECB rate increase in December, as expected by 64 of 73 economists surveyed by Reuters. The EUR/USD advance following the release amounted to less than a quarter of the subsequent decline.

What is next on the economic calendar?

Tuesday's US durable goods orders release, due at 12:30 GMT, is expected to show growth of 0.6% following a decline of 0.1%. Attention then turns to Wednesday's Fed statement at 18:00 GMT, with rates expected to be left unchanged. Whether a December hike is on the cards remains the unresolved issue as Fed Chair Warsh takes questions at 18:30 GMT.

The ECB's bank lending survey is due at 09:00 GMT on Tuesday, ahead of a speech by ECB President Lagarde at 17:00 GMT. Thursday's ECB announcement follows at 13:15 GMT, with the deposit rate expected to remain at 2.50%. Its December decision represents the Euro side of the interest rate differential.

What do the charts indicate?

About three-fifths of the rebound from the 14 October low just above 1.1100 to the 16 October high just above 1.1250 was erased by Monday's decline. EUR/USD trades beneath both its 50-day Exponential Moving Average (EMA), which sits just above 1.1350, and its 200-day EMA, just below 1.1500. Both averages have declined in every session since mid-September.

EUR/USD chart: 5-minute timeframe