EUR/USD analysis: dollar eases as Fed looms, founds support in better equities' performance
|EUR/USD Current price: 1.1365
- US Federal Reserve expected to pause its tightening cycle, market's fears could be overrated.
- Macroeconomic data keeps favoring the downside for the EUR/USD pair.
The American dollar remained under selling pressure Tuesday, resulting in the EUR/USD pair hitting 1.1402, its highest in a weak. Speculative interest continued unwinding dollar longs ahead of the US Federal Reserve monetary policy announcement this Wednesday, as the central bank is anticipated to slow its pace of tightening if not pausing it at all. This last scenario, however, seems unlikely considering the September dot-plot was still pre-announcing three possible rate hikes for the next year. Still, caution prevails ahead of the event. Thinning market's conditions ahead of the winter holidays in the northern hemisphere may have exacerbated the move against the greenback, which anyway, recovered some ground in the US afternoon. Data continued to play against the common currency, as the German IFO survey showed that business confidence worsened in December, with the index down to 101.0, a fourth consecutive decline. The survey showed that both, expectations and the assessment of the current situation were down. US figures, on the other hand, were a bit more encouraging, as Housing Starts and Building Permits bounced sharply in November, up 3.2% and 5.0% respectively. A better performance of US equities aided the dollar intraday but fell short of spurring sustainable demand. As said, the macroeconomic focus this Wednesday will be on the Fed's decision.
Meanwhile, the EUR/USD pair heads into the Asian opening trading at around 1.1360, unable to leave the range that has been in place since early November. The pair retains its neutral stance in the daily chart, hovering around a directionless 20 DMA but below the larger ones, which indicates that the risk is leaned to the downside. In the 4 hours chart, the pair has retraced its gains toward the congestion of moving averages, which remain directionless within a 20 pips' range. Technical indicators entered positive ground but the upward momentum is moderated, which, combined with the absence of a relevant resistance´s breakout, indicates limited demand for the common currency. Upcoming direction depends solely on the Fed, with the greenback set to strengthen sharply, should the statement comes less dovish than currently anticipated.
Support levels: 1.1325 1.1290 1.1255
Resistance levels: 1.1380 1.1425 1.1460
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