EUR/USD appears side-lined near 1.2066 ahead of FOMC

EUR/USD extends the pre-FOMC consolidation around 1.2060.
The dollar clings to daily gains on higher US yields.
The FOMC event will take centre stage later in the session.

Pablo Piovano FXStreet

The selling bias around the single currency remains well in place, with EUR/USD attempting a consolidative move around 1.2060.

EUR/USD weaker pre-FOMC

EUR/USD remains offered below the 1.2100 mark on Wednesday, always amidst the renewed buying interest surrounding the buck, which in turn has been fuelled by the rebound in US yields.

The euro docket is also weighing on the shared currency after the German Consumer Confidence worsened to -8.8 (from -6.1) for the month of May, as per the latest GfK report. France’s Consumer Confidence stayed put at 94.0 for the current month.

Across the pond MBA Mortgage Applications dropped 2.5% from a week earlier and advanced March trade deficit is seen at $90.59 billion.

The FOMC finishes its 2-day meeting later in the European evening. The Committee is expected to keep the Fed Funds Target Range and the broad monetary conditions unchanged. Despite Powell’s press conference is forecast to deliver an upbeat assessment on the economy, the main message is predicted to keep the loose stance and deem any taper speculation as premature.

What to look for around EUR

EUR/USD met some decent resistance in the low 1.2100s so far, always against the broader backdrop of the persevering selling bias surrounding the greenback. Also propping up the better mood in the European currency appears the investors’ shift to the improved growth outlook in the Old Continent now that the vaccine campaign appears to have gained some serious pace. In addition, solid results from key fundamentals pari passu with the surging morale in the bloc also collaborate with the monthly recovery in the pair (from the vicinity of 1.1700 to the boundaries of 1.2100 so far).

Key events in the euro area this week: German labour market report, flash April CPI (Thursday) – German, EMU advanced Q1 GDP, EMU flash April CPI.

Eminent issues on the back boiler: Asymmetric economic recovery in the region. Sustainability of the pick-up in inflation figures. Progress of the vaccine rollout. Probable political effervescence around the EU Recovery Fund.

EUR/USD levels to watch

So far, spot is losing 0.17% at 1.2068 and a breach of 1.1993 (low Apr.22) would target 1.1930 (200-day SMA) en route to 1.1887 (61.8% Fibo of the November-January rally). On the other hand, the next hurdle emerges at 1.2116 (monthly high Apr.26) followed by 1.2243 (monthly high Feb.25) and finally 1.2349 (2021 high Jan.6).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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