- EUR/USD comes under pressure and breaks below 1.0700.
- ECB’s C.Lagarde will speak later at the WEF in Davos.
- The FOMC Minutes will be the salient event later in the NA session.
Sellers seem to be back and force EUR/USD to break below the key support at the 1.0700 yardstick on Wednesday.
EUR/USD focuses on Lagarde, FOMC
After two consecutive daily advances, EUR/USD now faces some corrective downside and retreats to the sub-1.0700 region amidst the resurgence of the bid bias in the greenback.
In the meantime, yields on both sides of the ocean keep the consolidative phase well in place, as the recent increase in the appetite for riskier assets appear to be taking a breather on Wednesday.
Earlier in the session, the German GDP Growth Rate expanded 3.8% YoY in Q1 and the Consumer Confidence tracked by GfK improved a tad to -26 for the month of June. In France, the Consumer Confidence came in short of expectations in May at 86 (from April’s 87).
In the NA session, weekly Mortgage Applications are due seconded by Durable Goods Orders, while the release of the FOMC Minutes will close the daily calendar later in the day.
What to look for around EUR
The sharp rebound in EUR/USD surpassed the 1.0700 mark on the back by the strong resurgence of the risk-on mood.
Despite the pair’s current upside impulse, the broader outlook for the single currency remains in the negative territory for the time being. As usual, price action in spot should reflect dollar dynamics, geopolitical concerns and the Fed-ECB divergence.
Occasional pockets of strength in the single currency, however, should appear reinforced by speculation the ECB could raise rates at some point in the summer, while higher German yields, elevated inflation and a decent pace of the economic recovery in the region are also supportive of an improvement in the mood around the euro.
Key events in the euro area this week: Germany Final Q1 GDP, GfK Consumer Confidence, ECB Lagarde (Wednesday).
Eminent issues on the back boiler: Speculation of the start of the hiking cycle by the ECB as soon as this summer. Asymmetric economic recovery post-pandemic in the euro area. Impact of the war in Ukraine on the region’s growth prospects.
EUR/USD levels to watch
So far, spot is losing 0.72 at 1.0675 and a breach of 1.0459 (low May 18) would target 1.0348 (2022 low May 13) en route to 1.0340 (2017 low January 3 2017). On the other hand, the next up barrier aligns at 1.0748 (monthly high May 24) followed by 1.0779 (55-day SMA) and finally 1.0936 (weekly high April 21).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Follow us on Telegram
Stay updated of all the news
AUD/USD extends gains above 0.6700 amid subdued US Dollar
AUD/USD is trading firmer above 0.6700, having rallied to the highest in nearly two weeks on Wednesday after the Fed hiked rates by another 25bps, as expected. The dovish guidance by the Fed smashed the US Dollar alongside the Treasury bond yields.
EUR/USD re-attempts 1.0900 on dovish Fed-induced USD weakness
EUR/USD is trading near 1.0900, extending gains early Thursday. The pair stays firmer amid a broadily depressed US Dollar. Investors are assessing the latest dovish outlook from the Fed ahead of the SNB and BoE policy outcomes, which could trigger fresh volatility surge across the FX board.
Gold set to retake $2,000 on dovish Federal Reserve outlook Premium
Gold is gathering pace for the next push higher as US Dollar stays offered. US Treasury bond yields got smashed on dovish US Federal Reserve policy guidance. XAU/USD price is forming a bull pennant on the daily chart, with a bullish RSI.
Binance market share could drop after abolishing most zero-fee trading, boosts TrueUSD stablecoin
Binance phased out almost all zero-fee buying and selling Bitcoin (BTC) along with multiple trading pairs from its platform after nine months on Wednesday. An exemption was allowed for the TrueUSD/Bitcoin (TUSD/BTC) pair. This built atop a March 10 move to quietly wind down BUSD auto-conversion.
Bank of England and Swiss National Bank both set to hike
The Bank of England and Swiss National Bank both make monetary policy announcements tomorrow, March 23. Our base case is for the Bank of England to raise its policy rate 25 basis points to 4.25% this week, and then pause tightening. However, an unexpected quickening of inflation has added some uncertainty to that outlook.