EUR/USD at six week lows near 1.05 mark, Fed minutes in focus
|The German IFO index-led recovery in the shared currency turned out to be short-lived, with the EUR/USD pair briefly dropping below 1.0500 psychological mark to hit fresh six weeks lows.
Investors continue to refrain from buying the common currency in wake of growing political uncertainty in the region. In addition to this, rising bets for an imminent Fed rate-hike action, as early as in March, has been underpinning the US Dollar and collaborating the pair's downfall to the lowest level since Jan. 11.
The pair did attempt a tepid recovery, in wake of upbeat German IFO business climate index for Feb., but was sold into near 1.0520 region amid growing concerns over French Presidential election and Fed rate-hike prospects.
Investors now await the release of minutes from the FOMC meeting held on Jan. 31-Feb. 1 to get more clarity about the central bank's policy action at its upcoming meeting in March. Against the backdrop of hawkish comments from various Fed officials, including the Fed Chair Janet Yellen, hawkish signals would continue to be dollar-supportive and attract follow through selling pressure around the major.
Technical outlook
Valeria Bednarik, Chief Analyst at FXStreet notes, "Technical readings favor additional slides as in the 4 hours chart, the 20 SMA has accelerated its decline well above the current level, whilst technical indicators maintain soft bearish slopes within oversold territory, with no signs of changing bias."
She further writes, "A downward acceleration through 1.0490 should lead to a test of 1.0453, Feb. 11 low, with further slides below it pointing to a decline down to the 1.0420 region. Above 1.0520 on the other hand the pair can recover up to 1.0565, the 23.6% retracement of the post-US election slump."
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