- EUR/USD retreats from a multi-month high touched on Wednesday amid a goodish USD rebound.
- A hawkish assessment of the FOMC decision and the risk-off impulse benefit the safe-haven buck.
- The downside seems limited as traders keenly await the latest monetary policy update by the ECB.
The EUR/USD pair comes under heavy selling pressure on Thursday and snaps a two-day winning streak to the 1.0700 neighbourhood, or a six-month high touched the precious day. The pair extends its steady intraday descent through the first half of the European session and drops to a fresh daily low, around the 1.0600 mark in the last hour.
A combination of factors assists the US Dollar to stage a goodish recovery from its lowest level since mid-June, which, in turn, is seen exerting downward pressure on the EUR/USD pair. The US central bank on Wednesday signalled that it will continue to raise rates. Moreover, policymakers see the terminal rate rising to 5.1%, an additional 75 bps increases in borrowing costs by the end of 2023. This turns out to be a more hawkish communication than markets expected and offers some support to the greenback. Apart from this, a fresh wave of the global risk-aversion trade - as depicted by a sharp fall in the equity markets - provides an additional boost to the safe-haven buck.
Investors, however, expect the US central bank to pivot from an ultra-hawkish stance to something more neutral. This, in turn, keeps the US Treasury bond yields depressed, which might hold back the USD bulls from placing aggressive bets and lend some support to the EUR/USD pair. Traders might also prefer to wait on the sidelines ahead of the European Central Bank (ECB) decision, scheduled to be announced later this Thursday. The ECB is set to raise interest rates for the fourth time in a row, albeit at a slower pace than at the last two meetings. The current market pricing indicates a greater chance of a 50 bps lift-off amid signs of easing inflationary pressures.
Furthermore, investors will scrutinize ECB President Christine Lagarde's remarks at the post-meeting press conference, which will influence the shared currency. Apart from this, the US macro data - Retail Sales, the Philly Fed Manufacturing Index, Weekly Initial Jobless Claims data and Industrial Production data - should provide some impetus to the EUR/USD pair. Nevertheless, it will still be prudent to wait for strong follow-through selling before confirming that spot prices have formed a near-term top and positioning for any meaningful corrective pullback.
Technical levels to watch
|Today last price||1.0609|
|Today Daily Change||-0.0070|
|Today Daily Change %||-0.66|
|Today daily open||1.0679|
|Previous Daily High||1.0695|
|Previous Daily Low||1.0619|
|Previous Weekly High||1.0595|
|Previous Weekly Low||1.0443|
|Previous Monthly High||1.0497|
|Previous Monthly Low||0.973|
|Daily Fibonacci 38.2%||1.0666|
|Daily Fibonacci 61.8%||1.0648|
|Daily Pivot Point S1||1.0634|
|Daily Pivot Point S2||1.0588|
|Daily Pivot Point S3||1.0558|
|Daily Pivot Point R1||1.071|
|Daily Pivot Point R2||1.074|
|Daily Pivot Point R3||1.0786|
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
EUR/USD battles 1.0700 amid calmer risk tone, German ZEW eyed
EUR/USD is juggling in a narrow range just above the 1.0700 level in early Europe. The pair is sidelined amid a relatively calmer risk tone and a pause in the US Dollar decline. Markets digest the latest global banking sector developments ahead of Germany's ZEW survey.
GBP/USD remains pressured around 1.2250 as US Dollar recovers
GBP/USD is on a corrective move lower while testing 1.2250 in the early European morning. A broad rebound in the US Dollar is weighing on the pair, despite a better market mood. Investors stay cautious amid the global banking woes and ahead of the Fed decision.
Gold lingers below the $2,000 mark as the market awaits Fed’s policy decision
Gold price reached a fresh yearly high on Monday this week, with XAU/USD hitting the $2,000 mark for only the third time in recorded history; the last time was during the COVID era. The robust bull run began from the March low of around $1,800, and gold prices have not looked back since.
Coinbase argues core staking services are not securities in its letter to SEC
Coinbase submitted a comment letter to the US financial regulator asking for clarification on core staking services. The exchange explained that staking services fail every single prong of the Howey test, therefore, cannot be treated as securities.
FX thoughts for the week
Do central banks face a conflict between their inflation mandate and financial stability? The markets are still grappling with this question and confidence in the financial sector has not fully recovered. For now, central banks are responding with a conditional no.