EUR/USD bounces off lows, back near 1.1050 ahead of FOMC

  • EUR/USD dropped and rebounded from lows near 1.1030.
  • EMU final CPI fell in line with the preliminary readings.
  • The Fed is expected to reduce the FFTR by 25 bps later today.

After bottoming out in the area below 1.1040, EUR/USD has managed to regain some poise and is now trading in the 1.1055/60 band.

EUR/USD all the attention on the FOMC

Spot is alternating gains with losses so far this week following two consecutive weekly advances, always on the back of the improved stance around the buck and expectations surrounding today’s FOMC event.

Around EUR, market participants appear to have already digested last week’s ECB announcements and are now focused on the upcoming FOMC meeting, where the Fed is expected to lower its FFTR by 25 bps.

In addition, investors will closely follow Chief Powell’s press conference as well as the updated projections for inflation and economic growth.

Closer to home, final inflation figures for the month of August in Euroland showed headline prices rose 0.1% MoM and 1.0% over the last twelve months. Core prices rose 0.9% on a yearly basis.

What to look for around EUR

EUR/USD is trading without a clear direction so far this week. In fact, EUR lost some shine following the recent peaks beyond 1.11 the figure, recorded after the ECB announced €20 billion/month in bond purchases under the re-launched QE programme. The occasional recovery in spot, however, is seen as corrective only always against the backdrop of unremitting slowdown in the region, looser for longer monetary conditions by the ECB and the likelihood that the German economy could slip into technical recession in Q3. Adding to this gloomy scenario, potential US tariffs on imports of EU cars remain well on the table, while persistent uncertainty around Brexit adds to the downbeat outlook.

EUR/USD levels to watch

At the moment, the pair is losing 0.15% at 1.1053 and a break below 1.0990 (low Sep.16) would target 1.0925 (2019 low Sep.3) en route to 1.0839 (monthly low May 11 2017). On the other hand, the next up barrier aligns at 1.1109 (monthly high Sep.13) seconded by 1.1163 (high Aug.26) and finally 1.1178 (100-day SMA).

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