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The euro was launched higher against the U.S. dollar on Tuesday, yet the rise was marginal and well capped just pips away from $1.35 by a reported DNT interest structure between $1.30-$1.35, with talk of various Asian sovereigns protecting the level. EUR/USD now stands at a pivotal point, having now retraced 50% of the decline from $1.4940 to $1.2043.

The focus today (Wednesday) will be on the U.S., with the quarterly GDP Q4 and ADP data releases, together with the FOMC meeting, to garner all the attention. While all three events could produce some decent moves in the pair any other day, the chances are that volatility will remain quite low until the Fed publishes its update on monetary policies at 19.15 GMT.

According to Katarzyna Komorowska, fundamental analyst at FXstreet.com:

The Federal Reserve's monetary policy meeting is expected to be uneventful this month, following the FOMC's announcement of open ended QE4 in December which would be finalized only when the unemployment rate falls below 6.5% or inflation accelerates above 2.5%.

Traders should note this month there will be no press conference or updates to economic forecasts, thus making the meeting not that interesting. However, since there is a new cast of FOMC voters, there should be some decent action in prices.

As Kathy Lien, co-founder at BK Asset Management, notes:

The new makeup of the FOMC will be extremely important because this group will decide whether asset purchases should end in 2013. Gone are Lacker (the most hawkish member of the FOMC), Pianalto (a dove), Williams and Lockhart. Three doves and one hawk will be replaced with two uber doves (Evans and Rosengren) and two moderate hawks (George and Bullard).

As Mike Jones, currency strategist at Bank of New Zealand, notes, the U.S. Q4 GDP and the FOMC meeting later today, "should shake markets out of their slumber." He thinks the risk is skewed for further downward pressure on the USD.

Mike adds:

GDP data has plenty of potential to underwhelm, even if consensus expects a weak 1.1% (annualised) result. Moreover, a reminder from the Fed that the QE taps remain fully open at US$85b worth of monthly bond purchases, with no timeframe given for any stimulus exit, could undermine the USD both from a yield perspective and thru its 'pro-risk' implications.

Technically speaking, in view of Valeria Bednarik, chief analyst at FXstreet.com,

there's no reason why EUR/USD should not extend the upside as safe havens continue to be dropped in benefit of higher yielders.

"Key for bulls is holding the $1.3400 level" says Chris Capre, founder at 2ndskiesforex; "If pullbacks are corrective into this, then there is a possible buying opportunity here. But should price break back and close into the range of $1.3400 - $1.3250, then we could see a deeper pullback towards the lower level with medium and longer term bulls taking profit" Chris adds.

An skeptic analyst who thinks the euro outlook may soon turn sour is FXA partner David Solin:

"Note the slowing upside momentum over the last few months, a potential rising wedge (reversal pattern) forming over the last few weeks, and the view of a more important bottoming in the broader $ index, all add to the potential for an approaching, important top." he says.

Source: EUR/USD Resisting $1.35, At The Mercy Of FOMC