EUR/USD remains vigilant around 1.1730 ahead of FOMC
|- EUR/USD navigates a narrow range above the 1.1700 mark.
- EMU’s flash Consumer Confidence next on tap in the calendar.
- The FOMC meeting will be the salient event later in the NA session.
EUR/USD trades in the low-1.1700s on Wednesday amidst the generalized side-lined mood in the global markets ahead of the FOMC event later in the European evening.
EUR/USD still supported around 1.1700
EUR/USD looks for direction in the 1.1730 zone on Wednesday, managing at the same time to reverse four consecutive sessions with losses and put further distance from recent monthly lows in the 1.1700 neighbourhood.
Easing concerns around the Evergrande developer seem to have lent some respite to the risk complex in the last hours, although the pre-FOMC cautiousness appears to prevail among market participants so far.
While a move on the Fed Funds is largely ruled out later on Wednesday, all the attention will be on any mention around the potential timetable for the Fed to start trimming its bond-purchase programme. It is worth mentioning that the Fed will also publish the revised “dots plot”.
In the euro calendar, the European Commission will release its preliminary gauge of the Consumer Confidence for the current month. Across the pond and other than the FOMC event, MBA Mortgage Approvals, Existing Home Sales and the EIA’s report will also be in the limelight.
What to look for around EUR
EUR/USD managed to bounce off fresh lows around the 1.1700 area, although the bullish attempt has so far run out of steam around 1.1750. The firm sentiment surrounding the dollar is expected to remain the almost exclusive headwind for the pair’s aspirations of any meaningful rebound, at least in the very near term and in light of the upcoming FOMC event. In the meantime, Delta concerns, the progress of the economic recovery in the region and views on potential tapering from the Fed (and the ECB?) should keep hovering around spot for the time being.
Key events in the euro area this week: Flash September PMIs (Thursday) – German IFO (Friday) – German elections (Sunday).
Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the Delta variant of the coronavirus and pace of the vaccination campaign. Probable political effervescence around the EU Recovery Fund. German elections in September could bring some political jitters to the scenario. Investors’ shift to European equities in the wake of the pandemic could lend extra oxygen to the single currency. ECB tapering speculations.
EUR/USD levels to watch
So far, spot is gaining 0.07% at 1.1730 and faces the next up barrier at 1.1792 (55-day SMA) seconded by 1.1845 (weekly high Sep.14) and finally 1.1909 (monthly high Sep.3). On the other hand, a break below 1.1700 (monthly low Sep.20) would target 1.1663 (2021 low Aug.20) en route to 1.1602 (monthly low Nov.4 2020).
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