EUR/USD Current Price: 1.1276
- Tension across financial markets keeps the dollar demanded.
- Stocks in Wall Street tumbles as the FOMC meeting kicks off.
- EUR/USD corrects higher during the American session, remains bearish.
The EUR/USD is falling on Tuesday, on its way to the lowest daily close in a month, clearly below 1.1300. The dollar remains strong ahead of the FOMC meeting and amid volatility and risk aversion across financial markets. US stocks continue to move from sharp losses to intense recoveries, looking vulnerable. Expectations about monetary tightening and the situation at the Ukrainian border weighed on market sentiment.
Economic data released on Tuesday showed Conference Board’s Consumer Confidence Index dropped to 113.8 from 115.2 in January; the Richmond Fed manufacturing index dropped more than expected and the S&P CoreLogic Case Shiller home price index showed a 18.8% year-over-year increase in November, a slowdown from the 19.0% of November. The numbers had no significant impact on markets. The focus is on Wall Street and also on the FOMC meeting.
Mains stocks indices are falling sharply again. The S&P 500 drops 2.27% and the Nasdaq tumbles 3.12%. The VIX is at the highest in a year. The bond market and metals are also showing high volatility. Caution remains the theme among investors that are awaiting Wednesday’s Fed policy announcement. The central bank is expected to show clear signs of a rate hike in March.
EUR/USD short-term technical outlook
The bias in EUR/USD remains to the downside. The euro is trimming daily losses but it is vulnerable to new declines particularly if it drops under 1.1265. The next strong support is the 1.1230 area. Technical indicators favor the downside, although oversold readings are seen that could lead to some consolation before the FOMC meeting.
The 4-hour chart shows a downtrend line at 1.1320 and also the 20-simple moving average, so any recovery below that area looks like a correction. Before that level, the 1.1300/05 area should limit the upside. On a wider perspective, the euro needs to recover 1.1370 to change the bias.
Support levels: 1.1260 1.1220 1.1180
Resistance levels: 1.1315 1.1350 1.1385
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