- EUR/USD bulls come up for air ahead of the ECB where bias is skewed to the downside.
- US dollar has been set back as investors get behind risk assets again despite Delta covid concerns.
At the time of writing, EUR/USD is trading at 1.1801 and up some 0.2% into the closing bell on Wall Street.
The single unit travelled from a low of 1.1751 to a high of 1.1804 on the day following weakness in the greenback and as traders get set for the European Central Bank on Thursday.
On Wednesday, the safe-haven dollar fell back from the three-month highs as US stocks rallied despite caution pertaining to inflation fears and concerns about the highly contagious Delta variant.
By the close of New York trading, the dollar index, a measure of its value against six major currencies was lower at 92.758, DXY.
On Tuesday, the index hit a more than three-month high.
However, market participants remain bullish on the dollar's outlook and the US dollar smile theory is in play.
That is to say, strong US data are feeding into increased dollar bullishness as the Fed continues to take tentative steps towards tapering. Coupled with the risks of the delta variant and prospects of lower global yields, the greenback can be continued to be favoured.
Meanwhile, with no major data out, the focus is very much on the ongoing fiscal debate in the US, and Thursday’s ECB meeting.
''The end of the temporary suspension to the US debt cap could be a source of uncertainty and volatility, with Democrats and Republicans needing to approve an increase in the debt ceiling to avoid another government shutdown,'' analysts at ANZ bank argued.
With respect to the ECB meeting, the analysts say that it should help to clarify the ECB’s new inflation target.
However, the conclusion of the ECB strategic review means the distribution of probabilities is skewed to lower EUR/USD.
Markets are expecting a more dovish bias and that would imply a total reduction of the monthly purchases in 2022.
Such an outcome would be less than previously expected and would be expected to weigh on the EUR/USD for the foreseeable future and into 2022 when considering the ECB-Fed divergence.
|Today last price||1.1802|
|Today Daily Change||0.0021|
|Today Daily Change %||0.18|
|Today daily open||1.1781|
|Previous Daily High||1.1803|
|Previous Daily Low||1.1756|
|Previous Weekly High||1.188|
|Previous Weekly Low||1.1772|
|Previous Monthly High||1.2254|
|Previous Monthly Low||1.1845|
|Daily Fibonacci 38.2%||1.1774|
|Daily Fibonacci 61.8%||1.1785|
|Daily Pivot Point S1||1.1757|
|Daily Pivot Point S2||1.1733|
|Daily Pivot Point S3||1.1709|
|Daily Pivot Point R1||1.1804|
|Daily Pivot Point R2||1.1827|
|Daily Pivot Point R3||1.1851|
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.