Major equity indexes advanced slightly higher amid continuing speculation that the Fed will offer up another round of quantitative easing at Thursday's FOMC press conference. Stimulus hopes have been bolstering stocks higher ever since the ECB went ahead and announced its bond-buyinginitiative, which hasultimatelyput tremendous pressures on the Fed to follow in their footsteps. In light of the current backdrop, it seems that the QE 3 announcement has been priced in so to say, and as such, anything short of affirmation during Bernanke's speech on Thursday will likely leave investors with a sour feeling and spark a sell-off . Ahead of the FOMC rate decision, investors will have to digest another pivotal development taking place overseas. With German courts slated to make a ruling on the proposed European Stability Mechanism later today, our ETF to watch is the Rydex CurrencyShares Euro Currency Trust (FXE, B-). This popular currency ETF will come into the spotlight as investors react to lawmakers' decision regarding the proposed $640 billion eurozone bailout.

Chart Analysis

This euro ETF has been able to hold its ground after gapping higher following the recent ECB announcement of the open monetary transaction plan. FXE has deviated significantly from its upward sloping blue trend line as recentfundamentaldevelopments have bolstered this ETF to three-month highs. Above-average trading volumes over the last several days have also added to the bullish case as investors have demonstrated their improving sentiment in the face of loominguncertainties.

From a technical perspective, FXE is currently in a sweet spot; it is flirting with resistance at the 200-day moving average (yellow line). Despite encouraging price and volume trends, investors should be cautious seeing as how FXE failed to summit the $128 level not too long ago on May 21, 2012.

Outlook

If the court rules in favor of passing the European Stability Mechanism, bullisheuphoriawill likely follow; in terms of upside, the nextresistancelevel for FXE past the $128 mark comes in at around $130 a share. On the other hand, selling pressures could emerge if the court ruling throws a wrench into ongoing discussions between European policy makers. In terms of downside, this ETF has minor support at $126 a share followed by the $124 level.As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.

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Disclosure: No positions at time of writing.

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