EUR/USD keeps the range near 1.1870 ahead of FOMC
|- EUR/USD trades with decent gains in the 1.1870/80 band.
- US Retail Sales missed previous estimates in August.
- The FOMC meeting, Powell’s press conference coming up next.
EUR/USD navigates within the 1.1830/80 range ahead of the key FOMC event later in the NA session.
EUR/USD looks to USD, FOMC
EUR/USD is prolonging the side-line trading in the upper end of the recent range, with gains so far limited by the 1.19 neighbourhood, or weekly peaks.
The pair moves within the current range, always tracking the greenback and the broader risk appetite trends, which continue to favour the riskier assets for the time being.
In the data space, US headline and core Retail Sales expanded less than estimated during August, adding some downside pressure to the buck. Later in the session, Business Inventories, the NAHB index and the EIA’s weekly report on crude oil supplies are due ahead of the key FOMC event.
On the latter, expectations are centred on the press conference by Chief Powell and on any hint of the recently announced Average Inflation Targeting (AIT) scheme. In addition, investors will closely follow the updated economic projections and/or any changes of the Fed’s forward guidance.
What to look for around EUR
EUR/USD managed to test the area just above 1.20 the figure at the beginning of the month. The move, however, lacked follow through and triggered a corrective downside that met contention near 1.1750. Looking at the broader picture, the bearish view on the dollar continues to sustain the underlying constructive bias in the pair, all accompanied by the improved sentiment in the risk-associated universe, auspicious results from domestic fundamentals - which have been in turn supporting further the view of a strong economic recovery following the coronavirus crisis – as well as a calmer US-China trade front. The solid positive stance in the speculative community also underpins the constructive outlook in the euro, while the latest message from the ECB also collaborates with the momentum in the euro.
EUR/USD levels to watch
At the moment, the pair is gaining 0.09% at 1.1857 and a breakout of 1.1965 (monthly high Aug.18) would target 1.2011 (2020 high Sep.1) en route to 1.2032 (23.6% Fibo of the 2017-2018 rally). On the flip side, immediate contention is located at 1.1751 (monthly low Sep.9) seconded by 1.1709 (38.2% Fibo of the 2017-2018 rally) and finally 1.1695 (monthly low Aug.3).
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