EUR/USD: EUR rebounds from post-Fed low – Scotiabank

FXStreet Insights Team FXStreet

EUR/USD has climbed steadily through the overnight session to regain yesterday’s post-Fed peak against the USD, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR to retest upper 1.11s

“EUR gains are supported by narrowing yield spreads (EZ/US 2Y gap at –133bps today, the narrowest since May last year).”

“Narrower spreads suggest the EUR will remain well-supported on moderate dips and retain a firm tone against the USD for now. Fundamental challenges are creeping up on the EUR, however. The Bundesbank’s monthly report noted today that Germany may already be in a mild recession. A ‘broad-based, long-lasting slump’ was not expected, however.”

“Solid spot gains from the overnight low leave EURUSD trading close to yesterday’s peak and—despite the intraday chop yesterday—sustaining the bullish break out of the EUR August/September consolidation (bull flag). A push through minor resistance at 1.12 (August high) targets gains to 1.1275 (retracement and 2023 high). Support is 1.1120.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD accelerates losses, focus is on 1.1800

EUR/USD’s selling pressure is gathering pace now, opening the door to a potential test of the key 1.1800 region sooner rather than later. The pair’s pullback comes on the back of marked gains in the US Dollar following US data releases and the publication of the FOMC Minutes later in the day.

GBP/USD turns negative near 1.3540

GBP/USD reverses its initial upside momentum and is now adding to previous declines, revisiting at the same time the 1.3540 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs just above the key $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Fed Minutes to shed light on January hold decision amid hawkish rate outlook

The Minutes of the Fed’s January 27-28 monetary policy meeting will be published today. Details of discussions on the decision to leave the policy rate unchanged will be scrutinized by investors.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.